How Does the Stimulus Work? Rescuing the Economy

http://www.americanprogress.org/issues/2009/01/recovery_reinvestment101.html

Michael Ettlinger from the Center for American Progress explains why the US economy needs a stimulus bill passed that leads with public investments.

THE FACTS
1) WE ARE LOSING 15,000 JOBS A DAY.

2) THIS BILL IS ABOUT JOBS:
IT SAVES JOBS,
CREATES JOBS,
HELPS PEOPLE WHO LOST THEIR JOBS,
and LAYS THE FOUNDATION FOR FUTURE JOBS.

3) CONSERVATIVES ARE PUSHING THE SAME, OLD FAILED BUSH POLICIES THAT GOT US HERE IN THE FIRST PLACE – tax cuts that benefit big corporations and CEO’S at the expense of the middle class.

STIMULUS BACKGROUND:

1) SAVES AND CREATES 3-4 MILLIONS JOBS: The recovery bill will save jobs that are currently on the chopping block and create jobs by making targeted investments and boosting economic activity.

Relief for state and local governments will help them avoid making the layoffs of police, firefighters and teachers, more spending cuts, and tax increases that will worsen the downturn.

Stemming the downturn will protect private sector jobs that are on the verge of being cut.

The recovery bill will make targeted investments that will create millions of jobs. For example, the recovery bill’s…
Investments in energy will create 459,000 jobs.
Investments in infrastructure will create 377,000 jobs.
Investments in education will create 250,000 jobs.




Leading economists like Mark Zandi have concluded that targeted spending is the most efficient way to create jobs in a recession


2) HELPS PEOPLE WHO LOST THEIR JOBS: The recovery bill will help people who lost their jobs with middle-class tax cuts and investments in programs that will put money in the hands of people who will spend it and protect the most vulnerable.

The “make work pay” tax cut will give $1,000 to 95 percent of families.

Expanding unemployment benefits, food stamps, and health coverage will lend a helping hand to out-of-work families. And investing in these kinds of programs is also one ...

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Tags:

• how stimulus works
• deficit
• debt
• credit

[StupidCommentsMademe]

@holyworldruler So where did the money come from? Oh wait we print it....But if we just print money where does the value come from? Well each dollar printed makes your dollar worth a little less so technically its actually your money paying for the bridge. While this is a good theory government has its special interest and doesn't mean the best bridge builders will be hired hence crony capitalism. Why not lower the corporate tax from 1# of industrialized nations so companies will invest here.

[holyworldruler]

"Money" is conceit we use to organize our economy. It can't be "wasted." Is a bridge we don't need less valuable than one we do? Yes. But in a recession with 10% unemployment, we don't face a choice between a good bridge and a bad bridge; we face a choice between no bridge and a bridge. Even a bad bridge is a better use of idle resources. That usage of idle resources also triggers consumer spending, which pulls us out of the recession.

[LibertySteve]

People who believe this video lack critical thinking skills.

Stimulating an economy to build things we don't need, wastes resources on things we don't need. And if there was a need, the market would provide. Do you need to be stimulated to eat when you're hungry!? Gov stimulus steals resources from what the public would produce for themselves, and redirects it into things we don't want/need or afford.

[2tolerant]

Government giving out money creates artificial demand.

If it is not necessary to build a bridge then said bridge won't get built. But if the government is going to pay you to build it anyway then there is an artificial demand for said bridge. What, is the *government* going to drive on the bridge they paid you to build when it completes? or are they just wasting money - *your money*, taxpayers and owners of FED notes ?

[imre1000]

Stimulus makes a BAD situation WORSE.

The US got into a trouble by producing too little and buying too much on credit. The solution is to reduce spending (recession), and start producing products that the market wants.

This creates SUSTAINTABLE jobs, and not once off projects.

Stimulus projects rely on borrowed money, so not only are the newly employed people working in un-sustainable jobs, they are getting deeper into debt.

See this video for more details: watch?v=2I0QN-FYkpw

[whoo689]

When the gov't attempts to manipulate and drive the economy in a controlled direction, almost always it fails. Let the market work and bounce back on its own!! It will in due time. It won't take forever, either. Or even 10 years. Or maybe even 5 years, if we're lucky.

Contrary to popular belief, stimulus will only slow growth. It creates malinvestment and crowds out some of the business investment. Monetary policy also ends up screwing everything up, too, in the long run.

[whoo689]

Besides, when the bridges and other public works projects are done, hasta la vista. You'll have to either lay off those workers and stop buying from those suppliers, or you'll have to shift those workers to less productive gov't jobs just so they don't get unemployed.

Very few gov't jobs actually contribute to real growth.  Business growth is what drives our economy, not simply employing people. Investment and opportunity are the engine, not giving consumers a little extra cash.

[whoo689]

You lefties who are pushing this stimulus nonsense have no sense of economics. Keynesianism is bullshit! It's never been proven, and it was started by an idiot "economist" who didn't know his head from his ass. Very little of what was in Keynes's first big economic book in 1936 was evidence for his views. It was just a lot of theory and complex models and formulas.

Investing in jobs, lower taxes, lowering bad regulations, and real business growth will drive growth, not stimulus.

[whoo689]

Who's telling you this BS that Keynesianism WORKS?? It didn't work in the Great Depression. Stimulus certainly didn't work for Japan in the 1990s and probably even SLOWED growth significantly with malinvestment. Think about the last few big economic downturns. Did we have a stimulus package during Reagan's recession? No, and we had some of the best economic growth in the 20th Century. Same for Clinton's administration. So why now? Because "it's worse"? That's no justification. that's bull.

[whoo689]

As Dr. Cox says on Scrubs: wrong wrong wrong wrong! Wrong wrong wrong wrong!

STIMULUS DOESN'T WORK!! When will you lefties learn? All that thinking that this stimulus will somehow help us get out of the recession FASTER is bs! What would've gotten us out of the recession faster is getting rid of anti-growth regulations, not bailing out bad firms and letting better firms pick up the slack, not bailing out stupid homeowners who bought too much house and letting the house market bounce back.