misinformation stimulus arguments

Alas, some folks are spreding false information about proposals to improve economy. Here is one media (CNN) whom is guilty and it is sad some at CNN are following Fox misinformation.

http://mediamatters.org/items/200901270028
CNN's Brown, Velshi falsely claimed increased food stamps and unemployment payments are "not stimulus"

Summary: On Campbell Brown: No Bias, No Bull, Campbell Brown and Ali Velshi repeatedly claimed that provisions in the economic recovery bill that extend food stamps and unemployment insurance payments are, in Velshi's words, "not stimulus." But the same day, the Congressional Budget Office director stated in congressional testimony: "Transfers to persons (for example, unemployment insurance and nutrition assistance) would also have a significant impact on GDP. Because a large amount of such spending can occur quickly, transfers would have a significant impact on GDP by early 2010."

On the January 27 edition of CNN's Campbell Brown: No Bias, No Bull, host Campbell Brown and chief business correspondent Ali Velshi repeatedly claimed that provisions in the American Recovery and Reinvestment Act of 2009 that extend food stamps and unemployment insurance payments are, in Velshi's words, "not stimulus." But earlier that day, Congressional Budget Office director Douglas W. Elmendorf stated in testimony before the House Budget Committee: "Transfers to persons (for example, unemployment insurance and nutrition assistance) would also have a significant impact on GDP." Additionally, in 2008 congressional testimony, Mark Zandi -- the chief economist and co-founder of Moody's Economy.com, who was reportedly a McCain campaign economic adviser -- stated that "extending food stamps are [sic] the most effective ways to prime the economy's pump" and cited extending food stamps and unemployment insurance payments as having a greater "Fiscal Bank for the Buck" than any other potential stimulus provision he analyzed, including temporary and permanent tax cuts.
On No Bias, No Bull, Brown asserted: "Food stamps, unemployment benefits not likely to stimulate the economy because these are the people who are in the most dire straits spending the bare minimum." After Velshi replied, "That's right," Brown stated, "So the stimulus part comes from the big spending package that we're going to talk about." Velshi responded: "Right. And, you know, maybe the $500 or $1,000 you get per family. But you're absolutely right. There are some of these things that are more about recovery than stimulus. The administration likes to call it a recovery bill. If you're giving food stamps and you're giving unemployment benefits, that's not stimulus; that's simply helping people out who are in a lot of trouble."

In his January 27 testimony, Elmendorf said:
Transfers to persons (for example, unemployment insurance and nutrition assistance) would also have a significant impact on GDP. Because a large amount of such spending can occur quickly, transfers would have a significant impact on GDP by early 2010. Transfers also include refundable tax credits, which have an impact similar to that of a temporary tax cut.
A dollar's worth of a temporary tax cut would have a smaller effect on GDP than a dollar's worth of direct purchases or transfers, because a significant share of the tax cut would probably be saved. The nonbusiness tax cuts in H.R. 1 would reduce revenues much more in calendar year 2010 than in calendar year 2009 because much of the reduction in taxes would be realized by households when they filed their returns in 2010.

In his July 24, 2008, testimony before the House Committee on Small Business, Zandi stated:
An effective package of stimulus could include a gas tax holiday, expansion of the food stamp program, a payroll tax holiday, aid to state governments, extension of the investment tax incentives, and increased infrastructure spending. The biggest lift from this stimulus would go to lower income households struggling to pay for soaring gasoline and food prices, and small businesses who are getting hit hardest in the current downturn.

More specifically, extending food stamps are the most effective ways to prime the economy's pump. A $1 increase in food stamp payments by $1 boosts GDP by $1.73 (see table). People who receive these benefits are very hard-pressed and will spend any financial aid they receive within a few weeks. These programs are also already operating, and a benefit increase can be quickly delivered to recipients.

Zandi also included in his testimony a table that showed that "Extending UI [unemployment insurance] Benefits" would boost GDP by $1.64 for every dollar spent, a greater "Bank for the Buck" than the tax provisions he analyzed:

From the January 27 edition of CNN's Campbell Brown: No Bias, No Bull:
BROWN: And tonight, everybody, we're going to start a series, a No Bias, No Bull look at the president's economic plan. And our goal is pretty simple here: breaking it down into real terms. What would it actually mean for you, your family, your job, your neighbors? And is it enough to actually get the economy moving again? Chief business correspondent Ali Velshi is here to look at one of the most important parts of the package, and that is those tax cuts. And Ali, the Obama administration says this is the part of the plan that's aimed at helping working families. What can you tell us?

VELSHI: All right. It's complicated, and, you know, President Obama just said he hopes everybody's read the bill in Congress. This is -- there's a lot of information in here.
Let's start with tax cuts. The centerpiece of this is the $500 per worker or $1,000 per family that Americans will get. That'll come right on to your paycheck. It's not really a tax cut in the traditional sense because it's not ongoing, it's not a reduction in a percentage. Everybody under a certain income level -- and we don't know what that is yet -- is going to get it. But the Obama administration says 95 percent of working Americans will get that tax cut.
Then there's the child tax credit, an extension of that. The parents of 16 million more children will get a benefit under the proposed child tax credit. Food stamps: 30 million people will get enhanced food stamps. This not something that is ultimately going to stimulate the economy. If you're on food stamps, you're buying the minimum anyway. This is just to help people, the increasing number of people, who are out of work and need extra money.
Social Security. There's an immediate $450 to people -- a supplement to Social Security -- for some of the aged, some people on disabilities and things like that. So again, that'll be aid to older people or people suffering with disabilities in this program.

And an extension of unemployment. The Emergency Unemployment Act extended until December 2009. An extension to your ability to buy COBRA, which is your health-care benefits after you've been unemployed, although COBRA does tend to be very, very expensive. Many people who are laid off aren't able to do it.

The total of these tax cuts turn out to be about 275 billion. It's a big portion of the $825 billion plan. Again, a great deal of disagreement about whether or not this will actually work.

BROWN: Well, and go back to a point you made earlier. Food stamps, unemployment benefits not likely to stimulate the economy --
VELSHI: Right.
BROWN: -- because these are the people who are in the most dire straits spending the bare minimum.
VELSHI: That's right.
BROWN: So the stimulus part comes from the big spending package --
VELSHI: Right.
BROWN: -- that we're going to talk about.
VELSHI: And, you know, maybe the $500 or $1,000 you get per family. But you're absolutely right. There are some of these things that are more about recovery than stimulus. The administration likes to call it a recovery bill.
If you're giving food stamps and you're giving unemployment benefits, that's not stimulus; that's simply helping people out who are in a lot of trouble. And as we report here almost every night, that's an increasing number of people.
BROWN: Absolutely, Ali. And we're going to be walking through the --
VELSHI: Yup.
BROWN: -- spending part of the bill --
VELSHI: That's right.
BROWN: -- as we know more about it. With you.
VELSHI: We'll break it down. We'll talk about the health-care parts of it. We want everybody to understand what it is, and then you can decide whether you're in favor of it or not.
— M.G.
Posted to the web on Tuesday, January 27, 2009 at 10:46 PM ET

More info on bailout some considerations

Morning folks:

The following is an article of how much bang for the buck the proposed stimulus package would have per item. You might find interesting that something like food-stamps and aid to states has a larger economic impact than say corporate tax cuts. Tax cuts do not offer best bang for buck as claimed by GOP.

This is copyrighted article and reproduced under fair use doctrine. If objections lodged, I shall withdraw.




FACTBOX: Which forms of stimulus provide biggest return?

Thu Jan 8, 2009 2:13pm EST

(Reuters) - President-elect Barack Obama offered up a few more clues on Thursday about what sorts of programs he would like to see in a record-large economic stimulus package.
In a speech in Fairfax, Virginia, Obama said he intended to invest in energy, education, health care and infrastructure. He did not put a price tag on the stimulus plan, but his economic team has been eyeing a package in the $675 billion to $775 billion range, and it could move higher.
It will probably take until early February for Congress to hammer out the details, but economists already are weighing in on what types of spending generate the biggest economic returns.
Here are some of their ideas on proposals that are likely to be part of the stimulus package.

TAX CUTS:
Obama campaigned on promises for a middle-class tax cut, and said on Thursday that 95 percent of working families would receive a $1,000 tax break. He also proposed extending benefits and health care coverage for the unemployed. The total tab for tax cuts may reach $300 billion.
Lowering taxes puts money in consumers' pockets quickly, but economists worry that with uncertainty running high, many households will choose to save rather than spend the money. While most economists would like to see the U.S. saving rate rise from its current low level of 1.2 percent, a sudden jump in savings would deepen the recession.
Many economists are pushing for targeted benefits such as food stamps or extending unemployment benefits. Mark Zandi, chief economist at Moody's Economy.com, estimates that every dollar dedicated to increasing food stamps puts $1.73 into the economy. Increasing jobless insurance benefits typically gets a return of $1.64 per dollar. (http://www.economy.com/mark-zandi/documents/assissing-the-impact-of-the-fiscal-stimulus.pdf)
Obama also is expected to support tax cuts for businesses, which would raise corporate profits and may help the stock market. Unless the economy recovers quickly those tax reductions would probably do little to encourage companies to step up hiring and investment, Deutsche Bank economist Peter Hooper said.

INFRASTRUCTURE SPENDING
Obama has promised the nation's largest-ever public works program to help boost the economy and create jobs. Economists generally favor infrastructure spending, but the downside is that it takes longer to pay off and can miss its mark if political interests lead to too many unnecessary pet projects.
Obama acknowledged such concerns in his speech, urging Congress to "put the urgent needs of our nation above our own narrow interests."
Zandi estimates that infrastructure spending returns $1.59 for every dollar spent.
In congressional testimony last year, Zandi said tax cuts delivered the least bang for the buck, with a dollar's worth of temporary nonrefundable rebates worth $1.02 with a one-year lag. Permanent tax cuts yielded less than 50 cents of additional spending.

AID TO STATE GOVERNMENTS
State budgets have taken a huge hit from falling property and sales tax revenues, and governors have urged Obama to help. According to Zandi's estimates, the return on that investment is $1.36 per dollar spent.

Adam Posen, an economist with the Peterson Institute for International Economics, said helping states bridge budget gaps would help keep teachers and police officers on the job. (http://www.iie.com/publications/papers/pp20081222posen.pdf)
The more people stay in their jobs, the more they are able to pay mortgages, auto loans and credit card bills, and the more likely they are to continue spending.
(Reporting by Emily Kaiser, Editing by Andrea Ricci)

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http://www.reuters.com/article/GCA-Economy/idUSTRE5075R520090108

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note: this article does not differ too much from other economic analysis done by others. Social programs and infrastructure spending has always been known to stimulate economy.

Bill Moyers Journal: Leo Gerard debunks myths of Employee Free Choice Act

Excellent PBS interview of Leo Gerard 1-9, 09. Leo Gerard does interview with Bill Moyers. Leo is very good and worth watching. About one half hour: http://www.pbs.org/moyers/journal/01092009/profile.html

This is Leo's biography from the PBS article:


Leo W. Gerard

Leo W. Gerard is the International President of the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO, CLC. The U.S.W is the dominant union in paper, forestry products, steel, aluminum, tire and rubber, glass, chemicals, and petroleum.
In his first full term as United Steelworkers International President, Gerard has launched a wide range of new initiatives that have brought more than 350,000 workers into the union's ranks — a sixty-percent increase.
Under Gerard's leadership, the USW has also won tariff relief that helped save the American steel industry, a Workers First law in Canada that gives workers top priority for consideration in corporate bankruptcies, and the landmark Westray Bill that makes corporations criminally liable when they kill or seriously injure their employees or members of the public.
The union's growth over the past four years includes mergers with the American Flint Glass Workers, the Industrial, Wood and Allied Workers of Canada (IWA), the Paper, Allied-Industrial, Chemical and Energy Workers International Union (PACE), the Brotherhood of Maintenance of Way Employees (Canada), and other smaller independent unions.
The son of a union miner, Gerard started working at Inco's nickel smelter in Sudbury, Ontario at age 18. Inspired by a lifelong commitment to economic and social justice, Gerard rose through the ranks to become the first president of the new USW. Before being elected to his first full term by acclamation in 2001, Gerard had served as the Steelworkers' seventh international president, having been appointed to the presidency by the union's International Executive Board upon George Becker's retirement.
The second Canadian to occupy the USW's highest office, Gerard immediately embarked the union on a course of renewed activism, demanding — and winning — government action to halt an unprecedented flood of illegal steel imports and negotiating precedent-setting labor agreements that positioned the USW as the decisive force for a humane consolidation of the industry. Gerard also secured a prescription drug benefit for the retirees of liquidated steel companies, financed by hundreds of millions of dollars of VEBA contributions negotiated with the new companies.
Gerard also serves on the U.S. National Commission on Energy Policy and is a founding board member of the Apollo Alliance, a non-profit public policy initiative for creating good jobs in pursuit of energy independence.
Published January 9, 2009.