Monday, February 09, 2009

The Magic Of The Internet

Since I provided a small public service over the weekend - and got lost in the process - with a link to the House version of the stimulus plan, I expected better commentary than the following:
According to the CBO, the stimulus bill will actually hurt the economy in the long run. However, there is the possibility it will stimulate illegal immigration. In addition to providing up to 300 thousand construction jobs for illegal aliens, the bill will bail out irresponsible states like California. This will allow them to avoid dealing with one of the primary reasons they have a budget deficit. That reason is the extensive and expensive social net they have extended to illegal immigrants. Obama's stimulus will stimulate illegal immigration

What's that you say? The CBO says what? Why, I think I'll check it out:
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.


In contrast to its positive near-term macroeconomic effects, the Senate legislation would reduce output slightly in the long run, CBO estimates, as would other similar proposals. The principal channel for this effect is that the legislation would result in an increase in government debt. To the extent that people hold their wealth in the form of government bonds rather than in a form that can be used to finance private investment, the increased government debt would tend to “crowd out” private investment—thus reducing the stock of private capital and the long-term potential output of the economy.

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.(emphasis added)

So much for what the CBO says. You know, when people put stuff on the internet, one would think they might be willing to take the chance that others might not make sure they weren't full of shit.

To add, just as a note, if the tax cuts were reduced, there would be more room for the kinds of investment the CBO says would not crowd out private investment. So, really, the changes wrought by the Republicans are the reason the stimulus bill might - might - have a long-term negative impact on GDP (although 0.1 to 0.3 percent, while still negative, are hardly worth mentioning considering the contraction we are currently experiencing.

There is also the fact that a decade can make a world of difference, as the recently-departed and unlamented Bush Administration has so amply demonstrated.

Intellectual Redneck, you might want to think about finding a new moniker.

Virtual Tin Cup

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