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February 7, 2009

Krugman: Senate Compromise Cuts Most Needed Parts Of Plan

-- by Dave Johnson

What the centrists have wrought - Paul Krugman Blog,

Now the centrists have shaved off $86 billion in spending — much of it among the most effective and most needed parts of the plan. In particular, aid to state governments, which are in desperate straits, is both fast — because it prevents spending cuts rather than having to start up new projects — and effective, because it would in fact be spent; plus state and local governments are cutting back on essentials, so the social value of this spending would be high. But in the name of mighty centrism, $40 billion of that aid has been cut out.
I wonder if it is worse to pass a plan that fails than to pass no plan at all?

Posted by Dave Johnson at February 7, 2009 2:48 PM


Comments

Yes it worse to take the $810B out of the economy, filter it through the govt and pass it out.

The deal creates 4 Million new jobs for $810 B.
600,000 government jobs will cost $30B at $50K each.

$780 Billion left will create the remaining 3.4M jobs at a cost of $229,411 per job

Why not send that $780 Billion straight to the 114 Million households. Send $6,800 dollars to each household. That is 10 times more than planned.

Better yet, send it only to the 80% of households with lowest income. Send $8,553 to 91,200,000 households. You will see used cars, washers, and HD TVs flying off the shelf.

The top 20% pay over 50% of the taxes anyway. The bottom half of the households don't pay any IRS taxes. The top 20% know they have to pay for their own cars, houses, education and retirement. Why should the bottom 80% wait for contracts to be let. Cut the checks from the IRS mailing list.

Of course both methods are really stupid. But at least I disclose all my calculations. It would work with 100% assurance in so far as getting money to the people. Krugman on the other hand is supported by blue collar taxes to academia. And he has no actual model or calculations of any kind. Just refried rehash.

Posted by: Mace [TypeKey Profile Page] at February 7, 2009 7:22 PM

Mace, you're full of it! It doesn't make sense that all we'll get for our money is jobs. We're also investing in our infrastructure. That means our roads and bridges will be safer. The same goes for our public buildings and our community services. We’ll end up with improvements that are very overdue.

Where did you get the notion that this money comes out of our economy? Congress is attempting to put money into our economy and get it working again. Do you think that Wall Street is the economy? It's not! And neither are this country's wealthy.

We just can’t continue to savage our communities in order to give you another tax cut. Those times are over! It's time to roll your sleeves up dude, and go to work for a change.

Posted by: WASanford [TypeKey Profile Page] at February 8, 2009 11:43 AM

States should pay for their own roads and bridges. Who paid for CA's roads from 1870 to 1940. I expect you built them all by your lonesome. But those were the pioneers and builders. You are the ones that live off that legacy.

In fact this Depressant package will borrow every penny from investors via Treasury bills. They will not buy muni-bonds for State construction already in the pipeline or invest in Silicon valley. Not every penny will be wasted but it will have a slowing affect on the economy. The Cong Budget Office said it will slow the economy by 2011 after a spurt in '09-'10.

The Mercury news says CA has spent faster than population growth and inflation since 2003 (btw...where is that stimulative effect). Here is what you asked your Democratic leaders to do:

QUOTE
So looking at the past five years, where did that "extra" $10.2 billion of state spending above the rate of inflation and population growth go? The Mercury News found:

# The state prison system received the biggest share, about $4.1 billion of it. Corrections spending has increased fivefold since 1994. At $13 billion last year, it now exceeds spending on higher education. Tough laws and voter-approved ballot measures have increased the prison population 82 percent over the past 20 years. Meanwhile, former Gov. Gray Davis gave the powerful prison guards union a 30 percent raise from 2003 to 2008, increasing payroll costs.

# Public health spending — mostly Medi-Cal, the state program for the poor — received $2.9 billion above the rate of inflation and population growth. Part of that spike is due to an aging population; part is rising national health care costs. But state lawmakers also expanded Medi-Cal eligibility among children and low-income women a decade ago, increasing caseloads.

# Schwarzenegger's first act as governor, signing an executive order to cut the vehicle license fee by two-thirds, blew a large hole in the state budget. It saved the average motorist about $200 a year but would have devastated the cities and counties that had been receiving the money. So Schwarzenegger agreed to repay them every year with state funds. That promise now costs the state $6 billion a year, or $2 billion more than the rate of inflation and population growth since early 2003.

# Spending on a few other areas, such as higher education, general government, transportation and environment, also grew faster — by about $1 billion each — than inflation and population over the past five years. That was mostly to cover debt payments on bonds that voters approved for parks and highways, along with moves to limit university tuition increases.

# Finally, general fund spending on K-12 schools and social services, like welfare, actually grew less than the rate of inflation and population growth.
UNQUOTE

This is the only comprehensive msm article I have seen on the CA budget in 2 months. Math is too hard for J School students and you suffer for it.

http://www.mercurynews.com/breakingnews/ci_11649004

Posted by: Mace [TypeKey Profile Page] at February 8, 2009 5:51 PM

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