Here Are The Details Of Obama's Upcoming Push For More Fiscal Stimulus

Tyler Durden's picture

Yesterday we had some choice words indicating why fiscal stimulus in a period of unprecedented monetary intervention (such as now) is about the worst thing that can happen to America, when not even 8 months ago Goldman based its completely wrong and now discredited call that the $100 billion payroll tax "stimulus" would lead to 4.5% 2011 GDP (since retracted). Today, we provide some additional information on just how Obama plans to further stimulate the economy by sacrificing the middle class at the alter of the "this time it's different" gods. From Bloomberg: "President Barack Obama plans to ask Congress for billions of dollars in fresh spending to boost the economy and reduce unemployment, with a new focus on helping the long-term unemployed, an administration official said." But as pointed out the humor is in the post script: "The president also will call for long-term cuts beyond the $1.5 trillion that Congress has charged a 12-member bipartisan “super-committee” of lawmakers to trim by late November, the official said." Preferably cuts that actually affect the US after 2016 when Obama's second term expires. Or even 2013, because according to the mainstream media Perry is now gaining, and who is that Ron Paul fellow?

The comedy continues:

The dollar amount of the additional long-term deficit reduction measures will exceed the cost of the short-term spending that he will propose, said the official, who requested anonymity because plans for the speech haven’t been completed. According to the official, Obama plans to unveil his priorities in a speech in early September and propose a mix of tax cuts and infrastructure spending, including extending two measures that expire at the end of the year: the two-percentage-point payroll tax cut for workers and unemployment insurance benefits.


He will also include new spending and jobs proposals, beyond the ones he has mentioned on his current Midwest bus tour, said the official, without elaborating on the new policies. As part of his jobs package, Obama is said to be considering two sets of ideas: ones that will require legislative action and ones that will can be done by the executive branch alone, without congressional approval.

And now, apparently, Obama is the budget cut warrior.

In an interview with CNN yesterday, Obama hinted at his plans to press Congress for another round of budget cuts, along with more spending.


“We missed an opportunity a month ago when we could have dealt with our debt and deficit in a serious, balanced way,” he said. “We’re going to take one more run at Congress, and we’re going to say to them, ‘Look, here is a comprehensive approach that gets our debt and deficits under control and also accelerates job growth right now.’”

Then again what else can one expect from a president who five years ago said the following vis-a-vis the debt ceiling:

The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. … Increasing America’s debt weakens us domestically and internationally. Leadership means that ‘the buck stops here. Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.


As for the efficiency of the fiscal stimulus, this chart from the ARRA vs reality sumarized it all.

From the original ARRA proposal:

And the outcome:

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Racer's picture

Shocking a corpse doesn't work

MillionDollarBonus_'s picture

One of my favortie economists, Dr Paul Krugman (p.h.d, Nobel Laureate, MIT, Yale, Princeton, London School of Economics), has written extensively on this issue. The underlying problem is a lack of aggregate demand. Therefore the solution is to increase monetary stimulus untill people start spending again on consumer goods. We have a service economy here in the US which depends heavily on domestic consumption, so the doomer solution of saving simply won't work.

EscapeKey's picture

No-one should EVER save up for anything. EVERYTHING should be based on taking an increasing amount of loans in the bank. How fucking retarded can you get?

Perhaps if more consumption was financed through savings, recessions wouldn't last as long?

g's picture

We would have wealth if we produced goods. Relying on consumption will fail and is failing. Especially because it was subsidized heavily with debt. No amount of additional debt will cause job creation. All the government does is take money from one group and gives it to another through taxation. There is a loss as well because of the the inefficiency of anything the government does. People should be encouraged to save and to pay down debt. It is obviously debt that caused our current predicament, thus more debt is not going to be the solution, perhaps a very short term benefit at the best. There is no way the government can create jobs, this is a job for the private sector. If businesses (small/mid size), could actually count on the government to enforce contracts, stop changing regulations and tax codes, and provide a stable framework for operating a business, they might actually become confident enough to hire and expand. A clear cut plan to promote energy independence, government non-interference, balanced budget, reasonable regulations that do not change on political whims, revamped tax code eliminating loop holes and a flat tax, and how about simply enforcing the regulations we already have, separation of corporation and government (a new constitiutional amendment there!),furthermore, failure of the SEC and other government organizations come to mind ( and people cry and scream for more government interference and regulation, when it is those very institutions that failed miserably in the first place to stop the fraud because they are active participants) might go very far toward improving our sick economy.

LawsofPhysics's picture

Who are we selling those goods to?  Where is the cheap energy and labor coming from to make selling those goods profitable?  The world can already manufactur better than we can and for a much bigger profit, why would they buy anything from the U.S.?  All we produce now are "financial products" like those toxic MBS.  Yeah good luck dude. 

I see only one potential avenue- agriculture.  The U.S. has the most efficent agcricultural machine in the world.  Unfortunately, it has a huge energy demand too.  Therein lays the rub.

g's picture

Global wage arbitrage is well on its way and it will help to make the US more competitive in the global goods markets. As the standard of living falls in this country that will faciliate this process. The standard of living here is very much a farce, unsustainably lifted by leverage and debt. When the great 'revaluation' happens a lot is going to change. There are many reasons that businesses could compete effectively in the global markets, unfortunately through tax codes and various over-regulation of many industries, business can not compete. Take for instance unions. I am not anti-union, but unions need to compete against private enterprise in a fair marketplace. The government has elevated unions into the privileged special interest category. Why do you think that Boeing wants to move to a right to work state. It is Boeing's right to do so and the government brings a law suit against them. So in effect our government wages a war against productive business and props up failed systems backed by unions. It is rediculous and sad, especially at a time when those jobs are needed most. So if our country would stop sabotaging itself perhaps we could create a productive rather than a comsumptive economy. Look at the number of failing municipalities and states, due to debt, unions, pensions etc. The only reason the federal government has not failed yet is because it has someone (the FED) who prints money and monetizes the debt, this will fail as well. The government is further sabotaging business and the wealth of the people by devaluing the currency and decreasing its purchasing power etc. Oh well, I digress..........

RSloane's picture

Obama - "I'm going to increase exports!!"

Boeing is the US's largest exporter.

Obama - "Sue Boeing!!"

JohnF's picture

And that, ladies and gentlemen, is the shortest and most accurate description why stimulus isn't ever going to work.

Bluntly, the dysfunction is built into the system: export, but force the exporters to give money to the cronies of the party in power, effectively making them no longer competitive.

Just like the ethanol mess: the EPA requires now a certain amount of ethanol, which was supposed to be supplied by US makers. Since these have found - surprise, surprise - that they can't supply it (there is none out there available to buy), penalties are set to kick in to punish users for not using that which is not available, but according to the government's plans, should have been there.


Idiots is too nice a word...

LawsofPhysics's picture

I agree, but all this still ignores the energy part of the equation (which the governement has also been subsidizing and fucking with in general for 40+ years).

wage arbitrage AND the real cost of energy coming soon.  My point is that american businesses will not survive if they are exposed to the real cost of energy, so they like this government intervention, but hate all other government invervention.  Sorry, you can not have it both ways.  Nor can the entire world be a producer in the long run.  Who is "the world" selling too?  Mars?

g's picture

The energy side of the equation is going to have an ever increasing negative impact on the economy, since I already posted about that in another thread today I had decided not to repost, but here goes ;) The real cost of energy is going to be part of the great revaluation of everything.



Assuming that some form of energy production will emerge to replace fossil fuels is naive and dangerous. We should have started contingency planning, improving efficiency, and integrating large numbers of other energy producing systems 20 years ago, to mitigate the disaster that could occur when fossil fuels run out or do not produce a gain in EROEI.


The fact the the media and the government refused to accept the peak oil concept is egregious. There may be no technological wonder, technology does not produce energy by the way, that will provide for our current energy needs. Fact is even if we could produce enough electricity for commercial, residential, and transportation systems without fossil fuels, our infrastructure could not use it, it would take a decade or more to transition the transportation infrastructure to use electricity, once again something we should have started 20 years ago.


Check out, he sums it up best, some nice statistics on the number of alternative power producing plants it takes to replace fossil fuels, mind boggling really. He also discusses the issues with converting the transportation system to use electricity. Check it out.


FeralSerf's picture

I don't know why everyone keeps claiming America doesn't produce consumer goods anymore.  America produces more than the rest of the world combined (with the help of her 1.3 billion Chinese slaves working overtime in her Chinese colony).  Not slaves you say?  What would you call making people work and giving them worthless bits of computer data in return?

Let's just hope we don't have a slave revolt like the French did in Haiti.

Eat, drink and be merry for tomorrow we die!

rambo1028's picture

Love love love that song! Mathews has had it figured out for a long time. Wonder if he is a Ron Paul supporter yet?

FeralSerf's picture

Ecclesiastes 8: 15: “Then I commended mirth, because a man hath no better thing under the sun than to eat, and to drink, and to be merry . . ."

Isaiah 22:13 But see, there is joy and revelry, slaughtering of cattle and killing of sheep, eating of meat and drinking of wine! "Let us eat and drink," you say, "for tomorrow we die!"

rambo1028's picture

I did not know that was a quote straight from the bible! Learn something new everyday.... :)

ex VRWC's picture

We needed this comic relief this morning.  What's remarkable is that you deliver this with a straight face.  Well done!

LawsofPhysics's picture

LOL!  The "acdemic" theories are based on infinite growth in a finite world.  Good luck with that.  Energy is the only thing that matters and we have reached maximum flux folks.  In other words, maximum world GDP, it doesn't matter whether or not you have a service or manufacturing economy.  Of course, America has a whole bunch of "financial products" they offer.  Hhhmmm, any REAL VALUE in those paper bullshit products?  I think not.  Fraud remains the status quo.  Good luck everyone.

Whatta's picture

Genghis Krugman....yeah, what we need is another debt-leveraged ponzinomics bigger-and-better more-glorious-than-ever Spendathon to get us out of this. We ran through our credit cards, our equity market dot.bomb, and our houses...what is left? Oh yeah...

,...mortgaging our spouses and kids to buy Large Furniture to go in to our mcmansions, iCrap for the neighborhood.


The past is the past. The new normal is getting by on less and living local. Fvck China and Krugman.

Catullus's picture

Aggregate demand. That's cute. When do I get to see the magic demand aggregator machine?

Zero Debt's picture

That's the welfare state...

But the demand has no associated supply...

RSloane's picture

"DR" Krugman is just another pillow-biting, tear-stained cheerleader for anything that has been proven wrong over and over.  No wonder Obama loves him.

Schiff hits the fan's picture

What do the college kids and blacks who voted for Obama in 2008 have in common?

They're both unemployed in 2011.

Syrin's picture

Fortunately both groups are starting to put together cause and effect.   The others are true believers paid to feed Obamugabe's unicorns.

snowball777's picture

Do you think that makes them more or less likely to vote for the Secessionist, the Invisible Man, or Queen Batshit?

rambo1028's picture

I am hedging my bet on the invisible man. He has the only message that will resonate with them.... Well at least a portion of them. I have already brought a few disgruntled obama supporters into the light lol

Tom_333's picture

Exactly...War it is then.Since the aliens refuse to open hostilities I guess Iran will do for now (until more stimulus is needed)

Syrin's picture

Krugman is an idiot, no matter what awards he's received.   (Remember our Nobel peace Prize winning president?  Ask Libya their thoughts).


In fact, Krugman is SO BAD, he had to SHUT DOWN the comments sections of his own blogs because he was getting epically owned by those who responded.   Plus he routinely contradicts himself.


snowball777's picture

"Therefore the solution is to increase monetary stimulus..."

Not to agree with P-Krug, but at least present the correct argument on his behalf...which is for fiscal stimulus.

Troll better, or don't troll at all.

Dangertime's picture

Let us not forget that Krugman came courtesy of Enron....


Aside from that little tidbit....Krugman's recommendation is really based on covert default of everyone's debt by creating inflation in one hand while hiding it with the other.

The term we use here is "Financial Repression".


What FR does is allow the use of inflation to slowly fix the ship and allow the economy to hum again.  This method keeps TPTB in power.

If we went the more direct route of default, well, that is too much risk to TPTB, while at the same time far more timely and effective at cleansing the system.


In short, I will take Ron Paul over the Enron God any day.

sgt_doom's picture

"Dr Paul Krugman (p.h.d, Nobel Laureate..."

First of all, technically speaking, Krugman was awarded the Swedish Central Bank's Prize in International Economics in Memory of Nobel -- not the actual Nobel Prize, although it is consistently referred to wrongly.

Next, Krugman sounds good lately, especially for a lightweight, as he has been politically repositioning himself, after many years of evangelizing for the offshoring of all jobs in America.

One day, even that halfwit Krugman finally realized that might just affect aggregate demand.

No shit, Krugman!  A phrase he's heard often in his pathetic life.



slaughterer's picture

Magical Misery Tour extended for another 5 years.  

raki_d's picture

Obama.. take a break.. chill out for a moment
here you go..Slaughterer got you some juicypops..
get on that tour bus of yours and stimulate your mind first !!

hunglow's picture

Do those have fungibility.

mr_T's picture

WS and amerika needz MOBAMA.... Prez for life..... welcome to ClubFEMA...

PaperBear's picture

Ron Paul 81%, Rick Perry 19%


So much for the supposed front runner Rick Perry.

Ron Paul, Ron Paul, Ron Paul.

Frog-And-Toad's picture

I would love for this to be the headline after the next debate... Could very well be, as the MSM will have to give Ron a shot now...

EscapeKey's picture

Nah, it just means the bought-and-paid-for MSM will step up its disinformation campaign.

Dr. Richard Head's picture

The chances of MSM giving Dr. Ron Paul a shot are about as good as Jamie Dimon taking out a full-page WSJ ad telling the American public that JPM's bonus pool increases with each and every additional SNAP recipient added to the government dole.

Now, back to my regularly schedule silver stacking.

Syrin's picture

That makes obscure look commonplace

rambo1028's picture

Didn't you hear? Food stamps are another form of stimulus.... They never said stimulus to benefit whom...

Edited to add: if I would have read just a little further I would have seen you had already posted a link to the article I am referring too. Great minds....

brew's picture

there has never been a better time to nominate an outsider.  even though he is running as a republican, he is not a republican...

Mugatu's picture

I'm a Texan and I can tell you that Rick Perry is one giant doofus.  The guy is an ass-clown.  You thought Bush Jr was an idiot, just watch this guy - and this is coming from a lifelong Republican. 

Mugatu's picture

Great Picture of Rick Perry in full Moron Mode!

Dr. Richard Head's picture

Rick Perry is a cock-gobbler.  Thanks for the picture proof.

FeralSerf's picture

So was Monica Lewinsky and Linda Lovelace.  What's wrong with that?  You some religious wacko or something?

Dr. Richard Head's picture

HAHA. Stating facts does not equate to character judgement.  Barney Frank likes it in the ass and so does my wife.  I love my wife and don't love Barney. 

pods's picture

He's telling the truth, she really does love it!