The Stimulus is Still Stimulating

Respectfully submitted by Lawrence Rafferty(rafflaw)-Guest Blogger

Now that I have digested some wonderful Thanksgiving food and celebrated my grandson’s first birthday, it is time to get back to work.  In light of the recent calls by Rep. Paul Ryan, Rep. Eric Cantor and former Speaker and current GOP Presidential Candidate Newt Gingrich to terminate the non-partisan Congressional Budge Office (CBO), I couldn’t help but wonder why the Republicans have a problem with the CBO?  The CBO has been critical of both parties legislation in the past when the numbers just didn’t add up.  Could this latest announcement by the CBO that the Obama Stimulus package of 2009 is still stimulating the economy be the last straw for the Republicans in their support of the Congressional Budget Office?

“Despite Republican mythmaking that the American Recovery and Reinvestment Act (ARRA) “created zero jobs,” the CBO reported that the stimulus added up to 2.4 million jobs and boosted GDP by as much as 1.9 points in the past quarter. As it turns out, that conclusion confirms the consensus of most economists – including John McCain’s 2008 brain trust- that President Obama’s recovery program is continuing to deliver benefits for the American people.  From the beginning, the CBO has testified to the success of the largely concluded 2009 stimulus package in driving employment and economic growth. (That’s one reason why Republicans like GOP frontrunner Newt Gingrich want to abolish the agency.)

Now, as The Hill reported Tuesday, the CBO has found that “President Obama’s 2009 stimulus package continues to benefit the struggling economy”:  The agency said the measure raised gross domestic product by between 0.3 and 1.9 percent in the third quarter of 2011, which ended Sept. 30. The Commerce Department said Tuesday that GDP in that quarter was only 2 percent total.  CBO said that the stimulus also lowered the unemployment rate by between 0.2 and 1.3 percentage points and increased the number of people employed by between 0.4 million and 2.4 million…  By CBO’s numbers, the $800 billion stimulus added up to 0.9 million jobs in 2009, 3.3 million jobs in 2010 and 2.6 million jobs in 2011.”  Crooks and Liars 

The CBO Abstract that provided these numbers just won’t jive with candidate Newt Gingrich’s opinion of the stimulus and along with his past concern with the CBO’s projections on Obamacare might just have led to this recent call to abolish the CBO.  “Gingrich’s animus is hardly surprising. When House Republicans proposed HR 2 in January to repeal the dreaded “Obamacare,” they quickly got a rude awakening from the CBO. Demolishing Republican talking points on the subject, the CBO concluded repealing the Affordable Care Act would increase, not decrease, federal budget deficits:  Over the 2012-2021 period, the effect of H.R. 2 on federal deficits as a result of changes in direct spending and revenues is likely to be an increase in the vicinity of $230 billion.

That result did not fit the GOP script. So House Majority Leader Eric Cantor doubled down, essentially accusing the agency of lying.  Cantor also disputed the claim, put forth by the nonpartisan Congressional Budget Office, that the health care reform bill passed by Congress last year will actually reduce the deficit by $143 billion, calling the figure “budget gimmickry.”  “I think what we do know is the health care bill costs over $1 trillion,” Cantor told Hill. “And we know it was full of budget gimmickry. And it spends money we don’t have in this country.”‘  Perspectives

What facts do Newt and his fellow CBO detractors bring to try to prove that the CBO is lying or is inaccurate?  As best that I can tell the only argument that they use is the “Trust Us” argument. The CBO numbers tell us that the slow economy would be even worse had the stimulus package of 2009 not been passed and for some reason Mr. Gingrich and company can’t handle the truth.

If Speaker Gingrich does not want to believe the CBO numbers on anything that supports the Obama Administration, why has he praised and utilized the CBO in the past when it suited his agenda?  “Gingrich himself has been complimentary to the CBO in the past. In 1995, he bragged, “We’re still very proud of the fact that — as a team — House and Senate Republicans passed the first balanced budget in a generation. . . . We did it honestly, using the Congressional Budget Office, which was tough.” ‘  Washington Post

What will it take for politicians of any stripe to actually admit when legislation backed by their opponents has been successful?  I and many others here have criticized the Obama Administration in the past on its failure to prosecute the Torture enthusiasts from the Bush Administration and for declaring that it is legal for any President to put American citizens on assassination lists without any judicial oversight.  Bloggers and commenters have correctly excoriated the Obama Administration for not including single payer elements into Obamacare. Shouldn’t we hold the Republicans up to the same standard of truth when it comes to an agency of Congress that has been non-partisan since its inception?

For Rep. Cantor to claim that the CBO is basically lying and then not produce any evidence to back up the claim is egregious.  Especially since Cantor is the one making the incendiary claim and he is also the House Majority Leader.  Maybe we should be happy that Cantor only called the CBO liars.  He could have called them Socialists as Newt Gingrich did!  Do you think the Congressional Budge Office is truly non-partisan and if not, why not?  Let us hear what you think.  Don’t be shy!  Happy Thanksgiving!

 


 

53 thoughts on “The Stimulus is Still Stimulating

  1. $1.5 trillion in annual budget deficits is successful?

    Even if these numbers were true, this comes out to over $300K per job “saved”

    I recall the predictions in 2009 that unemployment would peak at 8% if we passed the stimulus, and would peak at 9% if we didn’t. Today the unemployment rate exceeds even the non-stimulus projections!

    Here is a chart of real world results that tell us how good these kinds of projections really are… if you trust government unemployment figures.

  2. raff:

    “Newt Gingrich wants to swing into Washington like a wrecking ball and demolish the key barriers between the GOP and the end of universal health care. But his primary target isn’t Obamacare itself. Rather it’s a non-partisan agency most people outside the beltway have never heard of — but that the D.C. establishment would arise and take arms to protect.”

    http://tpmdc.talkingpointsmemo.com/2011/11/former-directors-blast-gingrichs-plan-to-eliminate-congressional-budget-office.php

    “Former Speaker and current GOP presidential candidate Newt Gingrich might well have said that he wants to kill his personal physician because he didn’t like being told his blood pressure was too high

    http://www.ourfuture.org/node/70173

    Its like playing spin the bottle.

    just a couple more threads to add to your above list.

  3. I don’t even know what this article is about. Is it the fact that Gingrich doesn’t like the CBO or that the stimulus worked? If it is the first, why isn’t there a quote to back the premise? If it’s the second, I seem to recall the range of jobs “saved or created” was between 700,000 – 2.4 million. The Republicans are suggesting that the uncertainty the added debt has created (due to the possibility of raising taxes in order to cover it, etc.) has killed jobs. Which it has. The problem is the numbers are difficult to calculate because you can’t really quantitatively predict these things. Rather, you just wait for employers to hedge, act conservatively, and not hire. But in any event, the other question is whether it’s worth it. Best case scenario is that we spent 327,917 per job. Worse case, is 1.1 million per job. Why we are even having a discussion of whether it was a good idea or not?

  4. While both parties cater to the Corporatists, the Dems are not prone to bending reality, while the Reps need to lie to hide their true agenda.

  5. Jack,
    if you read the Washington Post linked article, they quote Gingrich calling the CBO a reactionary Socialist institution. Take a look at it. Are you suggesting that the CBO numbers are not accurate and if so, where is your evidence of that?

  6. Jack,
    GW Bush caused the deficit with catering to his base, the “haves and have mores”, with unneeded tax breaks and an Oil War. End the tax cut and Iraq: no deficit. Otherwise protectt the 1% and screw the rest of us. This is known as realty-based thinking, which is an abstraction to many people.

  7. Mike S. :=)

    Bill Clinton: Newt Gingrich Is ‘Being Rewarded For Thinking’

    “”I think he’s doing well just because he’s thinking, and people are hungry for ideas that make some sense,” Clinton told NewsMax. “He’s being rewarded for thinking.”

    http://www.huffingtonpost.com/2011/11/27/bill-clinton-newt-gingrich_n_1115057.html

    I.m quite sure he wasn’t praising him regarding this topic,but I guess everyone is trying to stay in the news,one way or another.

  8. Mike – one other difference between the Dems & the Reps is that the Dems actually believe that government institutions should be apolitical, analytical and fact driven. The Republicans insist that all departments spew Republican friendly BS. Their problem with CBO is that CBO does not confirm the fairy tales Republicans love about tax cuts and pretend spending cuts.

  9. “…recent calls by Rep. Paul Ryan, Rep. Eric Cantor and former Speaker and Newt Gingrich to terminate the non-partisan [CBO]”

    Banish that which doth not agree agreeth with me!! :-)

    Thanks for this post!

  10. So if handing out billions of taxpayer dollars to failed financial institutions is what kept the economy from getting worse, then why support the OWS movement? Why not raise the shout for more bailouts to financial giants?

    Also saying the stimulus saved jobs is a broken window fallacy.

  11. wasn’t there another republican in washington. i can’t recall his name, kinda of an orange looking fellow, cried a lot.

    maybe somebody should fill out a missing persons report.

  12. pete,

    Sometimes losing something or someone is a benefit and not a loss. I submit that orange politicians (not to be confused with orange confectioners like the Oompa-Loompas) fall into the this category.

  13. Good post raff. The Republicans got rid of the Office of Technology Assessment because it gave facts that conflicted with Republican ideology. The same could happen to the CBO. They’ll first claim that the CBO’s duties are duplicated elsewhere. Chip, chip …

  14. Let’s look back at the 2001 forecast from the republicrat CBO:

    … the Congressional Budget Office (CBO) projects that the total surplus will reach $281 billion in 2001. Such surpluses are projected to rise in the future, approaching $889 billion in 2011 and accumulating to $5.6 trillion over the 2002-2011 period.

    Even discounting $3 trillion for a few illegal and useless wars (stimulus to good Keynesians of course) the CBO was off by about $10 trillion. CBO forecasts are consistently optimistic and are used by Congress to avoid necessary discussions on entitlement reform and the long-term cost to future generations of carrying so much debt.

    More importantly the CBO is seriously underestimating long-term borrowing costs of the United States. The inevitable rise in interest rates demanded to cover inflation from US monetizing debt and our growing default risk will make the cost of servicing $20 or $25 trillion in debt completely impossible. If the US pays what Italy, Spain, Greece, Ireland and others are now paying to borrow we would default tomorrow. A US default would be spectacular in its implications for our society and the global wars over resources that would follow. The “nonpartisan” CBO gives government cover to ignore these massive risks.

  15. puzzling,
    as best that I can tell from your link to the 2001 forecast, their numbers were not taking into account the future Bush Tax Cuts and the two wars that were borrowed off the books. Those are 3 big issues that the CBO would not have known or taken into account, not to mention the recession that followed those massive tax cuts and off the book borrowing. I think your 3 trillion is a little off.
    Secondly, a projection of 10 years into the future is much different than showing how many jobs have already been saved or created by the stimulus in 2009 and 2010 and a partial projection for 2011.

  16. “Do you think the Congressional Budge Office is truly non-partisan and if not, why not? Let us hear what you think. Don’t be shy! ”

    Why make any comments in this blog? I’ve been a regular reader for a couple years and I’ve never seen Turly or any other author on this blog respond to something in the comments. It seems like a waste of time to me.

    I hope I’m wrong and that this is an oversight on my part, in which case I’m sure someone will correct me.

  17. ekeyra> No, I hadn’t heard of that parable before and thought you were simply using the phrase to express your derision of the stimulus. Now, having looked it up I don’t see the connection as it applies to a war analogy. War stimulates the economy through build up of resources and then creates jobs through reconstruction afterward.
    This was not the premise behind the stimulus. What is your interpretation?

  18. Also, the CBO estimate of 2001 did not foresee the 9-11 attacks and subsequent economic down turn.

    Over the years CBO estimates have always been more accurate than those offered by either party. There was an attempt during a Clinton SOtU address to make light of CBO estimates & the President did a good job of pointing that out to the morons that laughed when he used CBO numbers.

  19. rafflaw,

    Thanks – I missed the link. Yes, I haven’t the foggiest what Newt is talking about. As far as the data, no I don’t disagree with it. But I believe it is being reported incompletely. 2.4, I believe, was the ceiling. And the floor was 700K. In any event, it was a complete waste of money.

    Mike,

    Frankly, the only thing worse than a Democrat is an incompetent Republican. Democrats spend, spend, spend, and raise, raise, raise. And incompetent Republican just spends, spends, spends. Frankly, both are terrible but the latter is worse. You’re not going to hear argument against that from me (although the tax the 1 percent bit is rhetoric…it won’t even touch our long term debt; to fix the problem Congress must reduce entitlement programs – it’s a matter of math).

  20. Ekeyra> Funny how they are equating stimulus projects to increases in taxes. Perhaps that may be the case in a healthy economy but that isn’t the case poor economic times. What taxes have been raised this time?? Very few IF ANY.

    And those projects, when there is a significant lack of any others, are actually stimulating and have been throughout much of the other 20th century recessions. By lumping peace time stimulus in with starting a war-related stimulate is misleading.

    Through this broken window fallacy argument’s logic, any and all infrastructure project or maintenance is destroying job creating potential in other sectors. Was this case the transcontinental railroad which bridged both coasts of the US? Was this the case with the interstate highway system? Was this the case with all the public works systems like providing safe and effective water systems to US cities, or all the power utilities, or sanitation systems or even the massive expansion of the internet we’re each using right now? Did are all these government funded projects destroy private sector jobs?

    A little hard to swallow isn’t it?

  21. Bulletin,

    “By lumping peace time stimulus in with starting a war-related stimulate is misleading. ”

    Actually noone did that but you. The broken window fallacy doesnt rely on the explicit destruction of property to apply its logic. You say the stimulus created jobs, but what you are not looking at is how many jobs could have been created had those resources not been confiscated and funneled through the largest beauracracy in human history. That is the broken window fallacy. Looking at what you did produce and not at what could have been produced. The seen and the unseen. Besides that, if people truly valued those projects why wouldnt they have simply funded them voluntarily instead of using the force of government?

    “Through this broken window fallacy argument’s logic, any and all infrastructure project or maintenance is destroying job creating potential in other sectors. ”

    Correct, you’re learning.

    “Was this case the transcontinental railroad which bridged both coasts of the US?”

    Yes

    “Was this the case with the interstate highway system?”

    Yes

    “Was this the case with all the public works systems like providing safe and effective water systems to US cities, or all the power utilities, or sanitation systems or even the massive expansion of the internet we’re each using right now?”

    Yes

    “Did are all these government funded projects destroy private sector jobs? ”

    Yes

    “A little hard to swallow isn’t it?”

    Well when you sum up the federal governments spending debacles of the last century it is staggering to think how much wealth we’ve pissed away.

  22. Ekeyra>
    ““By lumping peace time stimulus in with starting a war-related stimulate is misleading. ”Actually noone did that but you. ”

    Uh…nope, sorry. Your video did @ 3:18. Check it out. And as far as your interpretation that all those examples I gave reducing private sector jobs is EXTREMELY speculative and fits quit well in to a libertarian philosophy. In reality, it’d be impossible to determine. And your questions about, why didn’t people just voluntarily do it themselves is…well amusing at best. I especially love how you assert clean water, utility and sanitation infrastructure killed private sector jobs. Wow!

    I pose some other questions for you. How much did the transcontinental railroad increase business across the country? How many opportunities did it create for expansion of those private sector businesses? The interstate highway system…same questions? I’ll help ya out this time. I only need two words…A LOT (simple answer). Where do you think the state of domestic business would be without those arteries that bring goods and services to everyone in the country? The internet…once again a facilitator for commerce expansion.

    All these things I mentioned are prime examples of HOW government projects have resulted in facilitating the growth and expansion of business and commerce in this country. You really cannot provide much of a substantive argument that we’d be better off without those systems those projects created and that we use on a daily basis. You really think it’d be more effective if ALL of them were run privately? I don’t see many people agreeing with you once they imagine the realities of such a situation. And speaking of that I challenge you to imagine that. Imagine what a typical road trip across the country would cost you as you traverse toll road after toll road after toll road charging whatever they want because they know you have no choice but to take their roadway to get where you’re going. Imagine the high cost for businesses to be located along those roads because the private owners also own the right of ways. And of course those right of ways would be “prime real estate” with high costs. Imagine that gas station located there and how much they’d have to charge you because their rent is so high and they have to pay more to supply that gas to because the supply trucks have to pay the high tolls to bring that gas to the station which is all passed along to the consumer.

    Getting the picture here? I do hope so.

  23. Bulletin,

    “Uh…nope, sorry. Your video did @ 3:18.”

    Sorry poor choice of words. Noone was mislead by that but you. War-time spending and peace time spending must both be financed by confiscating resources from taxpayers. Why would there be a difference? The same case you could make for taxing people and saying “oh look you have roads” could be made by the most hawkish republican saying “yes we spent all this money on a tank that exploded but look how much it protected you before it exploded”

    “And your questions about, why didn’t people just voluntarily do it themselves is…well amusing at best. ”

    Do you really not see the difference between a society organized by peaceful, voluntary and mutually beneficial cooperation, and one organized by government force? If they didnt organize and simply do it themselves, then what sense does it make to force them to pay for it and then try to layout some explanation that its really what they wanted because government is the will of the people.

    “I especially love how you assert clean water, utility and sanitation infrastructure killed private sector jobs. ”

    If the government is monopolizing services that could be fulfilled by the private sector how can you claim that they are not killing private sector jobs?

    “I pose some other questions for you. How much did the transcontinental railroad increase business across the country? How many opportunities did it create for expansion of those private sector businesses? The interstate highway system…same questions?”

    So I guess in your world a businessman buys or builds a factory and then just stands around going “gee i hope someone comes and builds a road really soon before i need to ship my products” ? Besides that, forwarding this argument is just making the case for corporate welfare. Why should the government be providing free roads to some businesses, and not every single one of them regardless of cost or location?

    “I don’t see many people agreeing with you once they imagine the realities of such a situation. And speaking of that I challenge you to imagine that.”

    The Privatization of Roads and Highways
    http://mises.org/resources/4084

    Done.

  24. Yes, you are. Sorry but your arguments are not based in a the realities of an ever evolving world. Government projects simply do not kill private sector jobs as they employ NUMEROUS private employers to work on those projects which filters through the economy as those employed people spend money on various goods and services which in turn creates demand for others which leads to more hiring and so on. Are government projects the sole source of job creation? No, of course not but during poor economic times like we’re in now, they are what helps build the economy back up along with other stimulative efforts. Once the economy is strong enough again the government pulls back again and the baton is handed back to the private sector (so to speak).

    The assertion that government hurts the economy more than it helps simply goes against the history of the US, especially from the mid-20th century on. You make the government sound like this massive force that takes peoples money and property and gives nothing back or people don’t benefit from it at all. An assertion that could not be further from the truth.

    Does private industry help further economic growth? Yes.
    Does the government further economic growth? Yes
    Do both of these working in concert with one another spur economic growth? Yes.
    Is privatization of everything the utopian view of a perfectly run society that benefits all? Nope. Sorry. The history of this country is replete with examples of how industry left to its own devices with no oversight does not work.

    NOW we’re done.

  25. “although the tax the 1 percent bit is rhetoric…it won’t even touch our long term debt; to fix the problem Congress must reduce entitlement programs – it’s a matter of math”

    Jack,

    Raising taxes on the 1% will get back the trillion$ that was lost due to the Bush tax giveaway. That money is directly related to the precipitous rise of our national debt, along with these ridiculous wars. However, putting the burden upon those most affected by these bad policy decisions is not the answer. The answer lies in that bloated defense budget, which is mainly an excuse to enrich those in the Military/Industrial complex. Our defense budget is larger than all other countries combined, to what end? Why do we have troops in Germany, S.Korea and other outposts, not to mention the follies that are Iraq and Afghanistan? Let America stop playing empire and start re-building itself. That is where the bloat in the budget lies, but that discussion never seems to be put on the table.

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