TPM: 35% of Fiscsal Stimulus Hasn't Yet Hit Economy

[flpoljunkie]

Despite talk about how the U.S. economy will soon lose the support of economic stimulus, or that stimulus 'hasn't worked', U.S. fiscal stimulus for the economy is far from finished, and this doesn't even consider additional measures being debated.

This is because a large chunk of the 'old stimulus' hasn't even hit the economy yet.

As shown below using data from ProPublica, 35% of the government's $790 billion original fiscal stimulus program (started in early 2009) is still on the way. 'Tax cuts remaining' and 'stimulus money either unspent or in progress' total $278 billion dollars.

This $278 billion will likely be delivered by the end of 2010, and it's a huge sum for just four months. Thus the remainder of 2010 will continue to be supported by stimulus, and investors should take note. 2011 is when the economy will lose its training wheels, though an additional round of economic initiatives currently being debated could push the timeline back even further.

http://tpmlivewire.talkingpointsmemo.com/2010/09/chart-of-the-day-a-huge-chunk-of-the-old-stimulus-hasnt-even-hit-the-economy-yet.php?ref=fpblg

[RUMMYisFROSTED]

1. Delivered right after the election

The dumbest strategist could figure different. So that means it's intentional.

:think:

[flpoljunkie]

2. It takes time to get infrastructructure going. Very few 'shovel ready' projects actually existed.

[RUMMYisFROSTED]

7. :ring: cluephone

The stimulus was passed 18 months ago.

QUESTION:

Fully expire after the 2010 elections?

Fully expire BEFORE the 2010 elections?


Only willful intent explains the implementation date.

[ProSense]

9. Maybe you should answer it

QUESTION:

Fully expire after the 2010 elections?

Fully expire BEFORE the 2010 elections?

And when it fully expires before the 2010 elections and things aren't fully back to normal, what do you campaign on?

What do you think the Republicans would campaign on?

There are bureaucratic and practical reasons for a two-year stimulus, including giving the administration the flexibility to target the money to projects that will have the biggest impact and ensuring that people still benefit from it while the economy is still down.

The stimulus included billions for food stamps. Do you think they should have ended that program by the election?

[RUMMYisFROSTED]

11. Straw.

It doesn't fully expire before the 2010 elections (when it's impact could have been maximal.)

That's my whole fucking point!

[ProSense]

12. Get your facts straight

The funds that haven't been distributed for projects are simply payments that haven't http://www.whitehouse.gov/blog/2010/08/11/myth-idle-recovery-dollars">been made.

The other one-third of the Recovery Act is projects where the money largely isn’t paid out until work is underway or nearing completion. If you were renovating your house, you wouldn’t pay for the whole thing up front – you would make progress payments as the key targets are being met and work is being completed. And you would expect the government to do the same thing with your taxpayer dollars, right? But an awful lot happens with the commitment of those dollars before anyone gets paid. If the bank pre-approved you for a loan for your renovation, you would certainly start drafting up plans, lining up contractors and securing permits. And then once the bank deposited that money in your account – just like when the government contracts with a Recovery Act awardee to give them a grant or loan – you would start hiring a contractor who would hire workers, buy materials and start the project. Well, the same is true of Recovery Act projects – that “unspent” Recovery Act project money has already started tens of thousands of projects nationwide.

Big picture that means that 94 percent of the Recovery Act is either in tax cuts, payments, or projects under contract. Of the remaining 6 percent, half has been awarded and contracts are being finalized - and half is in the final stages of the award process. So when critics like Rep. Boehner talk about stopping the spending, they’re essentially talking about taking away middle class tax cuts, leaving unemployed workers unexpectedly high and dry without an unemployment check, halting road and bridge projects and leaving them unfinished, leaving contractors unpaid for the work they’ve already done and more.

So when it comes right down to, is Rep. Boehner really ready to tell Ohioans they’d be better off if we stopped the Recovery Act?

The tax cuts, including food stamp increases were not designed to distributed by the election.

[RUMMYisFROSTED]

14. From the OP:

This $278 billion will likely be delivered by the end of 2010, and it's a huge sum for just four months. Thus the remainder of 2010 will continue to be supported by stimulus, and investors should take note. 2011 is when the economy will lose its training wheels, though an additional round of economic initiatives currently being debated could push the timeline back even further.

Math time: One month difference.

Your point: "It's ridiculous to think that they could implement it by Nov. 2010 - but implementing it by Dec. 2010 is totally reasonable."

Even though it was legislated 18 months ago. And the election is in November and not December.


:crazy:

[ProSense]

15. Payment

You think the people who are going to receive those funds don't know they're coming?

[RUMMYisFROSTED]

16. Yes, I do.

And even if they don't, it's a month too late.


:think:

[flpoljunkie]

19. This $278 billion will likely be delivered 'by the end of 2010.'

What is it about 'by the end of 2010' that you don't understand? That is not before the elections.

[RUMMYisFROSTED]

10. Note: These people aren't amateurs.

It's their business. And Presidential/Congressional politics are at the top of the biz. Mistakes are unacceptable at this level.

Occam = Intent.

[ProSense]

3. "The dumbest strategist could figure different. So that means it's intentional."

The government is a large bureacracy. A larger stimulus would have taken as long to be delivered.

Still, it's a two-year program. It includes tax benefits associated with 2010 tax returns.

[RUMMYisFROSTED]

4. Uh-huh.

[zipplewrath]

6. Both a fiscal and political waste

"Still, it's a two-year program. It includes tax benefits associated with 2010 tax returns."

Tax cuts was a lousy place to put stimulus, economically speaking, and politically no one seemed to notice, and having some of it kick in after the 2010 elections was politically worthless. Sure would like to know which congress critter fought for that brilliant strategy.

[ProSense]

8. "Tax cuts was a lousy place to put stimulus"

You mean there is a difference between putting money in people's pockets through payroll tax cuts and putting money in their pockets via a payroll tax holiday?

Really?

Tax relief for the unemployed is lousy?

Interesting.

[zipplewrath]

13. It's called the multiplier effect

Krugman speaks of it regularly. Depending upon where one inserts money into an economy, it can multiply its ultimate effect. Best inserted into the system with people who basically don't pay income tax, or an payroll tax. The lower down the payscale it gets inserted, the better. The reason that construction is such a favorite place to insert money is because it still involves alot of people to do, including everything from creating the raw materials, to manufacture and transportation of building components. Give a tax cut to the wealthiest, and it just ends up in a bank somewhere.

[ProSense]

17. What?

"The reason that construction is such a favorite place to insert money is because it still involves alot of people to do, including everything from creating the raw materials, to manufacture and transportation of building components. Give a tax cut to the wealthiest, and it just ends up in a bank somewhere."

What does the stimulus have to do with tax cuts for the wealthy? The tax cuts being referenced are the payroll tax cuts and unemployment benefits tax relief.

Infrastructure is a good stimulus, but so are unemployment benefits and payroll tax cuts.

[zipplewrath]

18. As good as what?

Unemployment benefits are good, probably not as good as some, but there is a human reality there too. Payroll tax cuts aren't "bad" but don't necessarily have the same impact as other efforts. And in this case, some of that won't even be "spent" for another 6 months.

[ProSense]

20. "Unemployment benefits are good, probably not as good as some"

[zipplewrath]

21. I'm surprised by some of that

Can you point me to the Post source? I'd have expected the Unemployment to be closer to the LumpSum tax rebate than to Infrastructure spending. That's how Krugman tends to suggest it. Actually, I surprised by the food stamp thing too, although I wonder if the "temporary" qualifier is significant.

[ProSense]

22. Here

Krugman:

<...>

Wait: there’s more. One main reason there aren’t enough jobs right now is weak consumer demand. Helping the unemployed, by putting money in the pockets of people who badly need it, helps support consumer spending. That’s why the Congressional Budget Office rates aid to the unemployed as a highly cost-effective form of economic stimulus. And unlike, say, large infrastructure projects, aid to the unemployed creates jobs quickly — while allowing that aid to lapse, which is what is happening right now, is a recipe for even weaker job growth, not in the distant future but over the next few months.

<...>

Chart found here.

[zipplewrath]

24. I do wish it was plotted against jobs

I understand the desire to plot it against GDP, but politically it would be far more significant to plot these against job creation/retention. I suspect that's where you'd see infrastructure perform better, and various tax incentives do significantly worse.

[flpoljunkie]

23. Yes, like the 2010 Make Work Pay Tax Credit.

[zipplewrath]

5. What the heck are they waiting for?

Really, considering that the majority SHOULD have been spent LAST year, and here we are deep into fiscal 2010 not to mention over half way through the calendar year, why are they still sitting on 35% of it?