Second Stimulus Debate - What's The Point Since We Have Not Run Out Of Money Yet?

[TomCADem]

I know there is a lot of debate going on about a second stimulus, which I agree may be needed . . .some day. However, as things stand, it takes time to build things. In California, even "shovel ready" projects often need several months of lead time with environmental approvals and construction plans. Thus, only a fraction of the infrastruture funds have been spent. Now, we may need more stimulus in the future, but what is the point of the debate now when we have not even spent and disbursed the money that has been approved. If anything, the real debate should be focused on stream lining the construction process, though this may entail preepting state and local building regulations and public works construction requirements.

My take is that the immediate effect of infrastruction funds is that it keeps construction projects that would have been canceled due to the recession alive. This is why the NYT noted that urban areas may be shortchanged, because they may not have as much flexibility to immediately implement a major infrastructure program. You need to develop plans, then condemn the land and buildings, etc.

[Catshrink]

1. I've read here that GOP governors aren't spending the money

is that true? Are they purposely holding it up to make sure Obama (and America) fails?

[TomCADem]

2. I Thought There Is Deadline To Spend It Or Lose It...

A state cannot simply take the money and sit on it. If they do, they have to pay it back under most federal grant programs that I familiar with.

[Deja Q]

3. Hmmm, if those folks want America to fail, won't they be in the same boat as the rest of us?

[RUMMYisFROSTED]

4. Let's spend the $700B left in the first stim, first.

[Oregone]

5. "We Have Not Run Out Of Money Yet" - Barely any has been spent. Thats the point

It takes forever to start significantly working. A debate on it now wont be passed for months and probably wouldn't get into the system for another year from now. Thats the point.

We know they "guessed the numbers wrong". They predicted an economy peaking at under 8% unemployment. The US is at 9.5% and perhaps climbing. Thats a big gap with a lot of suffering on the ground. They based the stimulus on those erroneous numbers.

They need a corrective adjustment in the stimulus funds to make up for the errors. If they delay until its all spent, why bother at all? People will already be suffering that many people don't give a damn about and there is no way another trickle at that time would do a damn bit of good.

[TomCADem]

6. Agree, But Whether Its 1 Billion Or 1 Trillion, It Takes Time To Build Stuff

We have not even made significant dent into what has been approved, and I have yet to hear anyone say, "Shoot, we are starting run out of infrastructure money." I don't believe the erroneous numbers argument. The fact of the matter is that they approved the biggest stimulus plan they could politically. However, what did you expect President Obama to say? "Yeah, we approved close to a trillion in tax cuts and spending, but you know, it ain't enough, and we are still headed for the shitter." Yes, that might have been honest, but it tends to undermine consumer confidence when a President says, "We're fucked" AND if you remember, the President was getting heat in February for being such a Debby downer.

Finally, the real issue is political. As you note, it takes time to build stuff, so the debate about the overall size is academic at this point. So, the REAL question is approve a huge stimulus up front then take time to spend it OR approve it in two parts as necessary.

[Oregone]

7. "I don't believe the erroneous numbers argument."

"Biden says 'everyone guessed wrong' on jobs number"
http://www.google.com/hostednews/ap/article/ALeqM5hYS8CIYEBgudlm2SjLh0xekik0RwD98QK1182

"Just 10 days before taking office, Obama's top economic advisers released a report predicting unemployment would remain at 8 percent or below through this year if an economic stimulus plan won congressional approval.

Yet the Bureau of Labor Statistics reports that unemployment in May rose to 9.4 percent"



So....you don't have to believe it for it to be true. Need to see a graph?


"So, the REAL question is approve a huge stimulus up front then take time to spend it OR approve it in two parts as necessary."

The thing is, stimulus costs LESS if its all at once. If you take a graph of the expected GDP and the real depressed GDP over time, and add up the area between the curves over some time, the less time you are dealing with, is the less money you will have to throw in the system to close the gap. It isn't like we need a static $3 trillion over X years, however long it is we decide to do it. Rather, its more like, we need like $1.5 trillion (or whatever the drop in GDP is) each year until we close the gap. The more years you waste, the more trillions you will trickle in up to that time. In fact, a small stimulus may only stop the GDP from falling further, rather than actually helping it to recover. You are at a significant disadvantage tossing in money slowly to combat this (its better to spend more, which will be retrieved anyway with tax revenue from a stimulated economy). You are definitely going to inject more into the economy to close that gap quicker if instead of spending $1 dollar on infrastructure (resulting in $1.58 dollars into the economy), you are spending $2 (resulting in $3.16 injected into the economy).

[TomCADem]

10. I Was Focusing On The Spending Of Stimulus, Per My OP

In which Krugman seemed to be in agreement with Romer. So, you may very well be right, but what I was talking about was the numbers relating to the spending of the stimulus, which I think Krugman and the Obama administration were generally on the same page per Krugman:

http://krugman.blogs.nytimes.com/2009/07/05/bruce-bartlett-misstates-the-problem/

<>

[billyoc]

8. Projects without environmental approvals are not shovel ready,

nor are those that need to develop plans, then condemn the land and buildings, etc.

[TomCADem]

9. Welcome To California

If you have already conmpleted environmental review AND you have already exercised eminent domain, then do you really meed the stimulus. I have yet to see a project where they were that far into the project, but were still in need of some more funding, but then maybe they do things differently in other states.