{"id":231,"date":"2009-02-06T18:28:50","date_gmt":"2009-02-06T18:28:50","guid":{"rendered":"http:\/\/blog.beliefnet.com\/cityofbrass\/2009\/02\/cbo-says-stimulus-will-work.html"},"modified":"2009-02-06T18:28:50","modified_gmt":"2009-02-06T18:28:50","slug":"cbo-says-stimulus-will-work","status":"publish","type":"post","link":"https:\/\/www.beliefnet.com\/columnists\/cityofbrass\/2009\/02\/cbo-says-stimulus-will-work.html","title":{"rendered":"CBO says stimulus will work"},"content":{"rendered":"

The nonpartisan Congressional Budget Office has analyzed President Obama’s economic stimulus plan and concluded that it will have a definite positive impact<\/a> in the short term, though with diminishing returns:<\/p>\n

In an analysis of the $900 billion version of the stimulus <\/a>bill
\ncurrently being debated in the Senate, the nonpartisan Congressional
\nBudget Office says that the bill could meet President Obama’s goals for
\njob creation and increase GDP–at least in the short term.<\/p>\n

But by the end of 2011, the total number of jobs created would be
\nhalf of what it was in 2010. And by 2019, the bill could actually
\nreduce GDP, although by only 0.1 to 0.3 percent.<\/p>\n

The letter<\/a>,
\nsent yesterday to Sen. Judd Gregg and copied to eight other leading
\nlegislators, estimates that the bill would stimulate the economy the
\nmost in 2010. By the end of that year, the analysis estimates, 1.3 to
\n3.9 million jobs would be created. The unemployment rate would be 0.7
\nto 2.1 percentage points lower than the 8.7 percent forecasted. And GDP
\nwould increase from 1.2 to 3.6 percentage points over a baseline
\nforecast.<\/p>\n

But after another year, CBO estimates, the bill’s effects would
\ndiminish. GDP would be 0.4 to 1.2 percentage points higher than
\notherwise, 0.6 to 1.9 million more jobs would be available, and
\nunemployment would be lower by 0.3 to 1 percentage points. And in 2019,
\nthanks to the national debt, the GDP could actually be slightly lower
\nthan if the government had done nothing.<\/p>\n

Compared with the House bill<\/a>,
\ntherefore, the Senate bill would stimulate the economy faster, CBO
\ndirector Douglas Elmendorf writes in the letter. But its impact would
\nalso be more diminished by 2011. The differences stem mainly from three
\nof the Senate’s additions: A $70 billion provision to spare about 24
\nmillion taxpayers from the alternative minimum tax, a $20 billion
\nexpansion in funding to states, and a decrease in withholding from the
\n“Making Work Pay” credit.<\/p>\n<\/blockquote>\n

This is basically the point of the stimulus – to provide a short-term boost to the economy. This stimulus package is heavily weighted towards immediate effect by design; later stimulus packages will provide for more long-term benefits (for example, major infrastructure projects like the smart energy grid, roads and (especially!) public transport<\/a> all will take years to get off the ground from planning stages to implementation). <\/p>\n

The “loyal” opposition insists that the stimulus is going to make things worse – for example, the Washington Times is trumpeting the CBO report as evidence that the stimulus will do active harm<\/a>. However the truth is that this stimulus is just phase one of the long term recovery that we needed. <\/p>\n

Here’s the text of the letter<\/a> sent to Sen. Gregg from the CBO’s own website.<\/p>\n

UPDATE: The Director of the CBO has a blog<\/a>, where he explains:<\/p>\n

The negative effect of crowding out could be offset somewhat by a
\npositive long-term effect on the economy of some provisions–such as
\nfunding for infrastructure spending, education programs, and investment
\nincentives, which might increase economic output in the long run.<\/p><\/blockquote>\n

which is exactly what i said above – longer-term spending on things like infrastructure will balance out the (very slight) decrease in GDP over the long run <\/p>\n","protected":false},"excerpt":{"rendered":"

The nonpartisan Congressional Budget Office has analyzed President Obama’s economic stimulus plan and concluded that it will have a definite positive impact in the short term, though with diminishing returns: In an analysis of the $900 billion version of the stimulus bill currently being debated in the Senate, the nonpartisan Congressional Budget Office says that…<\/p>\n","protected":false},"author":165,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[94,43,26],"class_list":["post-231","post","type-post","status-publish","format-standard","hentry","category-purple-politics","tag-economics","tag-obama-administration","tag-politics"],"yoast_head":"\nCBO says stimulus will work - City of Brass<\/title>\n<meta name=\"robots\" content=\"noindex, follow\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"CBO says stimulus will work - 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Aziz Poonawalla","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.beliefnet.com\/columnists\/cityofbrass\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/www.beliefnet.com\/columnists\/cityofbrass\/#\/schema\/person\/87dfd5533a0222456bb5ad6eaf152fbb","name":"Aziz Poonawalla","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.beliefnet.com\/columnists\/cityofbrass\/#\/schema\/person\/image\/","url":"https:\/\/www.beliefnet.com\/columnists\/cityofbrass\/wp-content\/wphb-cache\/gravatar\/a95\/a95f814e7f2984c887f3b03aed357433x96.jpg","contentUrl":"https:\/\/www.beliefnet.com\/columnists\/cityofbrass\/wp-content\/wphb-cache\/gravatar\/a95\/a95f814e7f2984c887f3b03aed357433x96.jpg","caption":"Aziz Poonawalla"},"description":"Aziz Poonawalla is a member of the Dawoodi Bohra Muslim community, and currently lives in Los Angeles with his wife and two children. City of Brass is his weblog, which was founded in 2002 under the name UNMEDIA. He is a co-founder of the annual Brass Crescent Awards. The name City of Brass refers to the Story of the City of Brass in the Thousand and One Nights, and the poem by Rudyard Kipling of the same name: Here was a people whom, after their works, thou shalt see wept over for their lost dominion; And in this palace is the last information respecting lords collected in the dust. -- Thousand and One Nights, Story of the City of Brass IN A land that the sand overlays, the ways to her gates are untrod, A multitude ended their days whose fates were made splendid by God, Till they grew drunk and were smitten with madness and went to their fall, And of these is a story written: but Allah Alone knoweth all! -- Rudyard Kipling, The City of Brass (1909)"}]}},"_links":{"self":[{"href":"https:\/\/www.beliefnet.com\/columnists\/cityofbrass\/wp-json\/wp\/v2\/posts\/231","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.beliefnet.com\/columnists\/cityofbrass\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.beliefnet.com\/columnists\/cityofbrass\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.beliefnet.com\/columnists\/cityofbrass\/wp-json\/wp\/v2\/users\/165"}],"replies":[{"embeddable":true,"href":"https:\/\/www.beliefnet.com\/columnists\/cityofbrass\/wp-json\/wp\/v2\/comments?post=231"}],"version-history":[{"count":0,"href":"https:\/\/www.beliefnet.com\/columnists\/cityofbrass\/wp-json\/wp\/v2\/posts\/231\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.beliefnet.com\/columnists\/cityofbrass\/wp-json\/wp\/v2\/media?parent=231"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.beliefnet.com\/columnists\/cityofbrass\/wp-json\/wp\/v2\/categories?post=231"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.beliefnet.com\/columnists\/cityofbrass\/wp-json\/wp\/v2\/tags?post=231"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}