1000 Page 8 Inch Thick Stimulus Bill Passes House

Despite the fact that there was no possible way for the representatives to read it.

Some facts: President Obama wanted a 40% tax cut 60% spending split. The bill has a 23-77 split.

Obama wanted 75% of the spending to occur in the first 18 months less that 50% occurs by 2011.

The Congressional Budget Office predicts unemployment will peak at 9% in mid 2010 without the stimulus bill. 8% in mid 2010 with.

(my source was NPR on these numbers)

Meanwhile a lot of economists say that the bill won't actually stimulate economic activity:

WASHINGTON — The compromise economic stimulus plan agreed to by negotiators from the House of Representatives and the Senate is short on incentives to get consumers spending again and long on social goals that won't stimulate economic activity, according to a range of respected economists.

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"It's unfocused. That is my problem. It is a lot of money for a lot of nickel-and- dime programs. I would have rather had a lot of money for (promoting purchase of) housing and autos . . . . Most of this plan is really, I think, aimed at stabilizing the situation and helping people get through the recession, rather than getting us out of the recession. They are actually providing less short-term stimulus by cutting back, from what I understand, some of the tax credits."

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Another reason that some analysts frown on the stimulus is the social spending it includes on things such as the Head Start program for disadvantaged children and aid to NASA for climate-change research. Both may be worthy efforts, but they aren't aimed at delivering short-term boosts to economic activity.

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Still, could this stimulus get the U.S. economy back on its feet?

By itself, probably not. The stimulus plan, however, is supposed to work in tandem with new efforts by the Treasury and the Federal Reserve to rid banks of distressed assets that are poisoning their balance sheets, and with other federal efforts to halt mortgage delinquencies and foreclosures. Much will depend on the details of both federal attack plans, which the Obama administration promises are coming soon.

There's also the problem of time. Much of the stimulus is to be spread over a two-year period or longer — and 2009 looks increasingly bleak.

source

That last part, the financial relief plan, may be problematic also. People don't believe the new Treasury secretary, Timothy Geitner, actually knows what he is doing.

Feb. 11 (Bloomberg) -- Jim Rogers, chairman of Rogers Holdings, said he renewed bets that U.S. stocks will drop as the government’s economic revival plan is a “disaster.”

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Geithner is attempting to revive a U.S. banking system throttled by $756 billion in credit losses and an economy that lost almost 600,000 jobs last month. His new approach comes four months after the start of the $700 billion so-called TARP, the Troubled Asset Relief Program, which both Democrats and Republicans have criticized as ineffective.

“He caused the problem all last year,” Rogers said on Bloomberg Television. “He came up with TARP, and he came up with all these absurd bailouts. Mr. Geithner has never known what he is doing. He doesn’t know what he is doing now and pretty soon everybody is going to find out, including Mr. Obama.”

source