CBO: Obama Stimulus Plan is Harmful
The Congressional Budget Office said that the Obama stimulus package will hurt the economy in the long run. This came as bad news for Democrats in a day when they were trying to convince even Republicans to vote for the bill.
The major spending plan seems to be riddled with pork-barrel projects that may hurt the economy rather than help it.
Poligazette says that if the bill fails in the senate and in the public, Obama will "suffer a tremendous blow."
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.
Luckily, bloggers all over are encouraging their readers to contact their senators and representatives to avoid voting for the bill. Harry Reid has recently said they may not have enough votes.
Obama got slapped in the face today.
haha, at least someone is doing their job you know?
The 12 year old child in the grown up empty suit doesn't understand that when you leave the markets alone they tend to mend themselves. What an idiot.
"The Congressional Budget Office said that the Obama stimulus package will hurt the economy in the long run. This came as bad news for Democrats in a day when they were trying to convince even Republicans to vote for the bill.
The major spending plan seems to be riddled with pork-barrel projects that may hurt the economy rather than help it."
Thanks for the information
The CBO letter is being misreported.
In fact, the letter says the plan will create or save millions of jobs and billions of dollars of INCREASED GDP compared to baseline forecasts in 2009 - 2012.
Yes, it says the plan will decrease GDP SLIGHTLY from where it otherwise would have been 10 years from now. How much? The letter says the net cost is 0.1% (1/1,000th in other words) to 0.3% (3/1,000ths) of GDP! Rounding error, in other words. And what part of the stimulus plan is having this predicted slight negative effect? Not the infrastructure spending. Not the education spending. These will have POSITIVE effects in the long run as well as short run, the CBO said. But these are only 25% of the bill.
From the CBO director's blog, summarizing the letter:
"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."
"The negative effect of crowding out could be offset somewhat by a positive long-term effect on the economy of some provsions—such as funding for infrastructure spending, education programs, and investment incentives, which might increase economic output in the long run. CBO estimated that such provisions account for roughly one-quarter of the legislation’s budgetary cost. Including the effects of both crowding out of private investment (which would reduce output in the long run) and possibly productive government investment (which could increase output), CBO estimates that by 2019 the Senate legislation would reduce GDP by 0.1 percent to 0.3 percent on net."
http://cboblog.cbo.gov/?p=205
Really the concern is with the pork-barrel projects and not so much the stimulus package. And I agree that people should be concerned about adding "pork" to the package.
I think the general consensus though is that both the Democrats and the Republicans want a stimulus package. One side wants to do this by increasing government spending, the other by lowering taxes.
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