CBO: Democrat "stimulus" will do little in short run, and harm in long run

[Little-Acorn]

More and more people - and financial experts - are coming out against the so-calld "stimulus" bills being rammed through the House and Senate, which President Obama is insisting must be passed and signed quickly. Their lack of any real effect on the economy, is making people wonder what all that spending is really for.

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http://www.washingtontimes.com/news/2009/feb/04/cbo-obama-stimulus-harmful-over-long-haul/

CBO: Obama stimulus harmful over long haul

Stephen Dinan (Contact)
Wednesday, February 4, 2009

Associated Press

President Obama's economic recovery package will actually hurt the economy more in the long run than if he were to do nothing, the nonpartisan Congressional Budget Office said Wednesday.

CBO, the official scorekeepers for legislation, said the House and Senate bills will help in the short term but result in so much government debt that within a few years they would crowd out private investment, actually leading to a lower Gross Domestic Product over the next 10 years than if the government had done nothing.

CBO estimates that by 2019 the Senate legislation would reduce GDP by 0.1 percent to 0.3 percent on net. [The House bill] would have similar long-run effects, CBO said in a letter to Sen. Judd Gregg, New Hampshire Republican, who was tapped by Mr. Obama on Tuesday to be Commerce Secretary.

The House last week passed a bill totaling about $820 billion while the Senate is working on a proposal reaching about $900 billion in spending increases and tax cuts.

But Republicans and some moderate Democrats have balked at the size of the bill and at some of the spending items included in it, arguing they won't produce immediate jobs, which is the stated goal of the bill.

The budget office had previously estimated service the debt due to the new spending could add hundreds of millions of dollars to the cost of the bill -- forcing the crowd-out.

CBOs basic assumption is that, in the long run, each dollar of additional debt crowds out about a third of a dollars worth of private domestic capital, CBO said in its letter.

CBO said there is no crowding out in the short term, so the plan would succeed in boosting growth in 2009 and 2010.

The agency projected the Senate bill would produce between 1.4 percent and 4.1 percent higher growth in 2009 than if there was no action. For 2010, the plan would boost growth by 1.2 percent to 3.6 percent.

CBO did project the bill would create jobs, though by 2011 the effects would be minuscule.

[5stringJeff]

I bet that matters absolutely zilch to any of the Democrats. Actually, I take that back. There are a couple of Democrats that attempt to be fiscally responsible, but they still operate on the flawed premise that government spending is essentially good.

[Immanuel]

I think that President Obama and the Democrats are simply trying to do what they think is best for this country, but I must say, I think this is a train wreck waiting to happen. I fear major inflation, significantly higher taxes and interest rates in the double digit range are on the horizon. And if this thing doesn't add jobs like they say it will, I expect a depression is on its way.

This is a spending bill and the only thing it will accomplish is to put money into the hands of the people that put Democrats in control. President Obama is going to have to raise taxes on the poor as he has already done and on the middle class. My guess is the rich will skate for a while.

Immie

[bullypulpit]

Of course, if we weren't saddle with the trillion dollars of debt the Bush administration racked up in eight years, it wouldn't be an issue. Regardless of which way the economy goes, we will be spending a decade...at least...cleaning up the flaming bags of fiscal dogshit left behind by the Bush administration.

[Kathianne]

Of course, if we weren't saddle with the trillion dollars of debt the Bush administration racked up in eight years, it wouldn't be an issue. Regardless of which way the economy goes, we will be spending a decade...at least...cleaning up the flaming bags of fiscal dogshit left behind by the Bush administration.
Took Bush 8 years, took Obama 18 days. Good learning curve.

[5stringJeff]

Of course, if we weren't saddle with the trillion dollars of debt the Bush administration racked up in eight years, it wouldn't be an issue. Regardless of which way the economy goes, we will be spending a decade...at least...cleaning up the flaming bags of fiscal dogshit left behind by the Bush administration.

There was a sizable debt before Bush, and Obama is not helping in the slightest. So, fiscally irresponsible as he was, it's not like you can place the entire national debt at Dubya's feet.

[bullypulpit]

There was a sizable debt before Bush, and Obama is not helping in the slightest. So, fiscally irresponsible as he was, it's not like you can place the entire national debt at Dubya's feet.

Funny, there was a surplus before Bush was POTUS.

[bullypulpit]

Odd, this from the 1/27/09 CBO report:
<center>http://i456.photobucket.com/albums/qq286/dzadzey/cboproj.jpg</center>

[red states rule]

Odd, this from the 1/27/09 CBO report:
<center>http://i456.photobucket.com/albums/qq286/dzadzey/cboproj.jpg</center>

BP, the mega pork bill will really do nothing until 2010

Here is what the CBO said

Macroeconomic Effects of the Senate Stimulus Legislation
In a letter sent today to Senators Grassley and Gregg, CBO analyzed the macroeconomic effects of an initial Senate version of the stimulus legislation (the Inouye-Baucus amendment in the nature of a substitute to H.R. 1, which is the House stimulus bill). CBO estimates that the Senate legislation would raise output by between 1.4 percent and 4.1 percent by the fourth quarter of 2009; by between 1.2 percent and 3.6 percent by the fourth quarter of 2010; and by between 0.4 percent and 1.2 percent by the fourth quarter of 2011. CBO estimates that the legislation would raise employment by 0.9 million to 2.5 million at the end of 2009; 1.3 million to 3.9 million at the end of 2010; and 0.6 million to 1.9 million at the end of 2011.

Those estimated effects are slightly greater than those of H.R. 1 (as introduced) in 2009 and 2010 (particularly in 2009), but lower in 2011, because more of the overall rise in spending and fall in revenues occurs in the first two years under the Senate legislation.

Most of the budgetary effects of the Senate legislation would occur over the next few years. Even if the fiscal stimulus persisted, however, the short-run effects on output that operate by increasing demand for goods and services would eventually fade away. In the long run, the economy produces close to its potential output on average, and that potential level is determined by the stock of productive capital, the supply of labor, and productivity. Short-run stimulative policies can affect long-run output by influencing those three factors, although such effects would generally be smaller than the short-run impact of those policies on demand.

http://cboblog.cbo.gov/?p=205

[red states rule]

and I wonder why left wings blogs have tried to tell their readers the CBO report did not exist?


Controversial CBO Report On Stimulus Turns Out Not To Exist

Reports of a recent study by the Congressional Budget Office, showing that the vast majority of the money in the stimulus package won't be spent until after 2010, have Democrats on the defensive and the GOP calling for a pullback in wasteful spending.

Funny thing is, there is no such report.

"We did not issue any report, any analysis or any study," a CBO aide told the Huffington Post.

Rather, the nonpartisan CBO ran a small portion of an earlier version of the stimulus plan through a computer program that uses a standard formula to determine a score -- how quickly money will be spent. The score only dealt with the part of the stimulus headed for the Appropriations Committee and left out the parts bound for the Ways and Means or Energy and Commerce Committee.

http://www.huffingtonpost.com/2009/01/23/a-controversial-cbo-repor_n_160495.html

[Jagger]

President Obama's economic recovery package will actually hurt the economy more in the long run than if he were to do nothing, the nonpartisan Congressional Budget Office said Wednesday. That's a lie!


CBO estimates that by 2019 the Senate legislation would reduce GDP by 0.1 percent to 0.3 percent on net. [The House bill] would have similar long-run effects, CBO said in a letter to Sen. Judd Gregg, New Hampshire Republican, who was tapped by Mr. Obama on Tuesday to be Commerce Secretary. That is also a lie.

[Yurt]

That's a lie!

That is also a lie.

:lol:

[Jagger]

:lol:

http://www.criticallayouts.com/images/rsgallery/original/lol-cartoon-ag1.gif

[Yurt]

http://www.criticallayouts.com/images/rsgallery/original/lol-cartoon-ag1.gif

thats a lie!!!!!

[5stringJeff]

That's a lie!

That is also a lie.

So what's the truth, if the non-partisan CBO is lying?

[Jagger]

So what's the truth, if the non-partisan CBO is lying? Read the report....

[5stringJeff]

Read the report....

Here's the exact quote from the CBO report (http://www.cbo.gov/ftpdocs/99xx/doc9987/Gregg_Year-by-Year_Stimulus.pdf) (pdf format):

"In contrast to its positive near-term macroeconomic effects, the legislation would reduce output slightly in the long run, CBO estimates, as would other similar proposals."

[Jagger]

Here's the exact quote from the CBO report (http://www.cbo.gov/ftpdocs/99xx/doc9987/Gregg_Year-by-Year_Stimulus.pdf) (pdf format):

"In contrast to its positive near-term macroeconomic effects, the legislation would reduce output slightly in the long run, CBO estimates, as would other similar proposals."

Like I said, dude, the CBO didn't say that President Obama's economic recovery package will hurt the economy more in the long run than if he were to do nothing.

[Kathianne]

Like I said, dude, the CBO didn't say that President Obama's economic recovery package will hurt the economy more in the long run than if he were to do nothing.

How is "the legislation would reduce output slightly in the long run." not hurting the economy in the long run?

[Immanuel]

Like I said, dude, the CBO didn't say that President Obama's economic recovery package will hurt the economy more in the long run than if he were to do nothing.

This must be some of that Obama double speak. Like the plan will save 4 million jobs. How the hell will anyone know if the plan saves one frigging job? Since it is already done, no one will ever know what would have happened if he were to have done nothing.

I'm sure that in four years when we ask Democrats what the plan did for us, they will say, "well, it didn't produce like we thought it would, but if we had done nothing at all, things would be a heck of a lot worse." In the same light when we ask Republicans the same question, they will reply, "Not a damned thing and if we had done nothing at all then we would not be in the mess we are today... why George Bush had it right all along." :laugh2:

Immie

[avatar4321]

Funny, there was a surplus before Bush was POTUS.

No there wasnt. I know you guys like to pretend there was. But there wasnt.

Even if that hadnt been a 10 year projected surplus (ie nonexistant) it even touch the already existing debt.

[5stringJeff]

Like I said, dude, the CBO didn't say that President Obama's economic recovery package will hurt the economy more in the long run than if he were to do nothing.

Actually, it says exactly that.

[bullypulpit]

From the 1/8/09 CBO report...

<blockquote><b>The Long-Term Outlook</b>
High deficits in the near term may be inevitable in the face of the financial crisis and severe economic weakness, However, once the nation gets past this downturn, it will still face significant fiscal challenges posed by rising
health care costs and the aging of the population. Continued large deficits and the resulting increases in federal debt over time would probably constrain long-term economic growth by reducing national savings and investment, which in turn would cause productivity and wage growth to gradually slow. The rate of growth of spending on health care is the single greatest threat to budget balance over the long run, and such spending will have to be controlled in order for the fiscal situation to be sustainable in future decades. - <a href=http://www.cbo.gov/ftpdocs/99xx/doc9958/01-08-Outlook_Testimony.pdf>The Budget and Economic Outlook: Fiscal Years 2009 to 2019, pg 31</a></blockquote>

Healthcare, not any stimulus package, will be the greatest drag on future economic growth. Medicare, not Social Security as the Bush administration prattled on about, is the REAL 600lb gorilla in the room. And it is this particular challenge that must be met by seeking to address the issues underlying the skyrocketing cost of healthcare in America rather than just cutting spending on Medicare and Medicaid which only leaves more people on the outside looking in.

[Jagger]

How is "the legislation would reduce output slightly in the long run." not hurting the economy in the long run? What did the CBO say the positive effects of the legislation would be?

[Jagger]

Actually, it says exactly that.


http://img300.imageshack.us/img300/2003/jokerclapbq7.gif

[Trigg]

What did the CBO say the positive effects of the legislation would be?


CBO, the official scorekeepers for legislation, said the House and Senate bills will help in the short term but result in so much government debt that within a few years they would crowd out private investment, actually leading to a lower Gross Domestic Product over the next 10 years than if the government had done nothing.

there ya go.

[Jagger]

there ya go.

What exactly did the CBO say would be the positive effects of the bill.

[red states rule]

What exactly did the CBO say would be the positive effects of the bill.

It is hard to talk about something that does not exist. Unless you are one of the folks, or liberal group, getting the handout