Nancy Pelosi and the House Democrats, sans 11, passed the stimulus bill in perhaps one of the most partisan votes of the recent past.

Today, Nancy tried to put a happy face on her inability to convince Republicans to see things her way:

Throughout the stimulus “discussion,” reports varied on whether and how many Republicans might support it.   It wasn’t until the final couple of days that it became apparent that while unable to defeat the bill, they would show a united, principled stand and vote no.

Why, when many of these same house Republicans supported TARP and have been just as guilty of irrationally exuberant spending the past few years, did they now decide to get solid on spending?   I don’t have the full answer but I suspect some of it could be due to this:

Public Support for Economic Recovery Plan Slips to 42%

 According to Rasmussen, net positive support for the stimulus plan has slipped from +11% last week to only +3% this week.   Worse for Democrats, unaffiliated voters shifted from a +1% last week to a -23% this week.  

It appears that as more time goes by and more information comes out, as people who are not blinded by latent BDS or worship of “The One,” understand more of what really is and isn’t in the bill, they understand that the bill will stimulate nothing but the size of government.

The Dems may have won the battle in the House.   However, the House Republicans have done a good job of shining light on this pile of stink.   The question now will be whether the Senate Republicans can organize themselves to accomplish the same level of principled opposition,  perform more public education and see what the public sentiment is in a week or two.

I do believe that if people understand this bill they will find it seriously lacking.   While I’m not hopeful, if enough people burn the Senate phones the Dems could find themselves winning the battle but losing an embarrassing PR war.

This evening the House passed their Piggy Bank of Pet Projects.   The vote will be reported by the MSM, in a derisive way, as mostly party line.   As we’ve become accustomed to Republicans being the ones to cross the line I have to admit surprise to see that all House Republicans, along with 11 Democrats,  voted against laying nearly $1 trillion of additional debt on our children for the actual purpose of increasing the size, scope and run rate of the Federal beuracracy and budget!

This was a principled stance and one the Rs should have been following the past few years.   Who knows, if they had, the public may not have become enamored with what in only 8 short days, has proven to be anything but hopeful or change!

Hats off and thanks to all 188 who voted against this porker!

Now, off to the Senate.   What’s the over/under on the number of spines that will be displayed in that chamber?

When he was running for the election and again shortly after, President Obama made clear that he was going to be the person to bring fiscal responsibility back to Washington:

“That is why I will ask my new team to think anew and act anew to meet our new challenges…. We will go through our federal budget – page by page, line by line – eliminating those programs we don’t need, and insisting that those we do operate in a sensible cost-effective way.”

Other than adding numerous zeros to the size of the numbers being used, can someone show me anything new or cost-effective about the ever growing, special interest laden stimulus bill?

Long before he was officially inaugurated, while he was still known simply as PEBO, President Obama was telling the country all the horrors of the current economic challenges.   Phrases like “never before” and “Great Depression” seemed to be spoken by PEBO in every media opportunity he had.   Of course he wasn’t just there to tell us how bad things were, and how much worse they were yet going to be, he also had the prescription for what ails us: stimulus.

Obama along with Democrats across the nation, have been planning and preparing  a stimulus package since before the election.   While Obama was initially focused on infrastructure that was “shovel ready,” the plan has taken a look of “anything goes”.   Expansion of abortion funding and perpetual expansions of medicaid and education spending are all now included in  the plan and I don’t see a shovel needed for any of those.

As the price tag grows, Obama and others continue to sound the sirens saying that only with this stimulus will we see a signs of a recovery anytime soon.

Um, no.

In a report  by the non partisan Congressional Budget Office (remember, these were the same folks that he Dems used to  think were geniuses  when they published reports about “Bush’s deficit” or spending in Iraq), less than 2/3rdsof the stimulus package will actually impact the economy before 2011.   In fact, if you back out the $208 billion of “tax cuts,” only about 1/2 of the “investment” stimulus will get to the economy in time to help.   As we run downhill with sharp knives towards the embrace of socialism,  don’t you believe the  government has the capability and wisdom to know when to “stimulate?”

Well, there’s always the jobs that the stimulus will be creating right?

Again, um, no.

In a paper  coauthored by President Obama’s  chair of the Council of Economic Advisors, Christina Romer, it was found that government attempts at using stimulus to “correct” recessions are ineffective.   The abstract of the paper “What Ends Recessions,” sums up her findings succinctly:

This paper analyzes the contributions of monetary and fiscal policy to postwar economic recoveries. We find that the Federal Reserve typically responds to downturns with prompt and large reductions in interest rates. Discretionary fiscal policy, in contrast, rarely reacts before the trough in economic activity, and even then the responses are usually small. Simulations using multipliers from both simple regressions and a large macroeconomic model show that the interest rate falls account for nearly all of the above-average growth that occurs early in recoveries. Our estimates also indicate that on several occasions expansionary policies have contributed substantially to above-normal growth outside of recoveries. Finally, the results suggest that the persistence of aggregate output movements is largely the result of the extreme persistence of the contribution of policy changes.   (emphasis mine)

One can only assume that his ignoring of this issue shows that he doesn’t listen to his personally selected advisors anymore than he does a Republican Congress person.

So let’s recap:

1. The “Stimulus” is not “Shovel Ready”
2. The number of jobs created is suspect
3. The “Stimulus” won’t be stimulating enough to put a tremor in Chris Matthews leg
4. Any stimulus that does come will likely come after a recovery has already started.

So why do the stimulus?   The answer is fairly simple and came from Rahm Emanuel:

"Never let a serious crisis go to waste"

President Obama and his BFFs Nancy and Harry are taking advantage of the economically gullible to increase their control and influence.   I don’t like what they’re doing but that’s a part of winning elections.   That said let’s be honest enough to quit calling this a stimulus and call it what it is:   a piggy bank of pet projects

News out today that Fiat has obtained a 35% interest in Chrysler.   They have an option to increase their stake to 55% although those terms weren’t disclosed.

Anyone buying a 35% in a rapidly failing company in a flailing industry is news.   Obtaining a 35% interest in a company while providing no cash remarkable.   Why would Chrysler give up 35% of what admittedly is a company that has nearly zero worth, for an agreement that brought no cash?

According to the published reports, the marriage makes sense for both companies.   Fiat has wanted to reenter the US market.   Via Chrysler, they have access to a dealer network and a lot of unused production capacity.   Chrysler is supposed to get access to Fiats design work which is supposed to be particularly good in mid and compact cars.   While the arguments for the combination make some sense, I saw a nearly throw away comment in the article that caught my eye:

“However,” he warned, “the deal does not provide Chrysler with any new liquidity commitments from Fiat, which could reflect a desire by Fiat to protect its investment under future downside scenarios for Chrysler.”

This is another lesson in the unintended consequences of government activity.

I have no doubt that both parties see benefits in their arrangement.       However, it’s clear from the statement in the article that the only real reason this relationship exists is because the government has provided $4 billion with the promise of much more to come.     That last bit is why Chrysler is willing to give away 35% of itself for little more than nothing.

Chrysler must present a plan to the Auto Czar by May 1st.   This plan needs to show how they will satisfy the shrill calls for greater fuel efficiency and make a profit.    How credible the plan is will weigh on the Czar’s decision not only to advance more funds, but  whether the already advanced $4 billion should be yanked backed.     Chrysler has ranked near the bottom of fleet fuel efficiency and have no magic beans to quickly grow something saleable in the efficiency market.   Additionally, Chrysler is sitting on a ton of excess capacity.   Capacity/overhead costs, that  will be a substantial drain on their ability to show profitability in any reasonable time.   Fiat provides answer to both of those questions.  

It’s pretty clear that Fiat has no interest in supporting Chrysler if they get no additional government funding.   If the government cuts Chrysler off, Fiat will just rip up their otherwise worthless contracts and look for another alternative, maybe even pick up some of the bankrupted assets on the cheap.

While you’ll hear lots of reports in the papers and even during follow up hearings, as the automakers beg for more money, about how much Fiat ♥ Chrysler, don’t be fooled.   There wouldn’t and won’t be any marriage if the government is holding a shotgun paid for by taxpayers money!

Update 1/21 – Dad29 pointed out that reports out this morning are saying that Fiat only   ♥ Chrysler if Chrysler brings an additiona $3 billion dowery.   Being right so often is a burden I gladly bear for NRE’s readers :)

As reported by the Agency who shall not be named and others, Hamas supporters spent the day celebrating the fact that even though they suffered numerous casualties and destruction, they weren’t wiped off the face of the earth.

I’m wondering if we should be taking notes.

The Hill.com is reporting today that a “stimulus bill” of $1 trillion is not even enough for some Democrats:

"Some of us are saying we need a stimulus of 1.2 or 1.3 or 1.4 trillion to prevent a depression, rather than just slow our descent into a depression," said Rep. Jerrold Nadler (D-N.Y.).

Hamas is partying after losing and suffering economic damage of a paltry $2 billion.   Think of how big our party will be after Congress flushes $4 trillion ($2 trillion Treasury won’t tell what they spent it on, $700 Billion TARP and the stimulus plan), and have nothing more to show for it than “We aren’t dead yet!”  

Now that I think of it, wouldn’t we all have a lot more fun and probably stimulate the economy just as much,  if instead of waiting until the $4 trillion is spent, we take it and put it all towards a party now?

The New York Times is reporting that President elect Barack Obama may have found a way to get   the remaining $350 billion of TARP money…he’s going to promise to use it properly.   Already Republicans are starting to cave:

South Dakota Republican Sen. John Thune  said a public statement might be helpful in easing the concerns of some Republicans and South Carolina Republican Sen. Jim DeMint said he believed such a statement would be made by Obama’s team.

As of this point, no one can tell us how the first $350 billion was used.   No one can tell us what benefit it provided.   Further, Treasury is still fighting lawsuits to release information on  how they used $2 trillion.   Finally, we’ve got Obama continuing to negotiate an increasing stimulus package, now reported to be $850 billion, with no real detail but cries of “it’s not big enough.”

With what we’ve seen on how all of the various “bailouts” have been handled to date, we’re now supposed to believe that an “assurance” from Obama will  cause transparency and integrity to shoot forth from this next tranche?

It’s  more and more obvious  that some of the Senate Republicans are out of touch with the world outside of the beltway.   If they were paying attention they would know that all of Obama’s commitments have all been determined to have an expiration date  on them.   It seems that the day from statement to expiration is decreasing along with the days to Obama’s inauguration.

While the Senate Republicans may get bamboozled by:

reassurances the money would be focused on trying to fix the financial industry crisis that has also left millions of families experiencing home foreclosures,

you’ll pardon me if I don’t hold my breath to see it happen, even if it’s only for just five more days!

President elect Barck Obama and team have put out what passes for “detail” in the Obama administration, about Obama’s planned stimulus plan.   You can read the plan here.

I have to give Obama and his team credit.   When Paulson came screaming that the world was coming to and end unless he got $750 billion, he only had 3 pages to outline his plan.   Obama and team, screaming that the world will come to an end unless they get $775 billion,  have managed to use an entire 14 pages to outline their plan.   Well, unless you take out the title page, table of contents and extra white space…then you’re probably down to just 9 or 10 pages.   Even so, Obama has managed to double the number of pages explaining his $775 billion plan.   I guess the extra $25 billion does buy something!

Christina Romer, Obama’s nominee for chair of the Council of Economic Advisors is one of the authors of the plan/document.  

In a paper that Romer published in 2007, she concluded that tax cuts stimulate the economy 3x the amount of the tax cut.   In other words, for ever dollar of tax cut the economy grows by $3.   In Obama’s plan however, Romer and her coauthor argue that “tax cuts” will generate less than $1 of economic stimulus for each $1 of “tax cut.”   How can those be reconciled?

The reconciliation is pretty simple; Obama’s plan has no tax cuts.   Tax cuts are permanent tax reductions.   Rather, what the plan offers is a rebate similar to what was done last year.   They are being called “tax cuts” only because the mechanism proposed to effect them is tied to taxes so as give Republicans and some fiscal conservative Democrats, cover to agree to mortgage our children’s future.

Romer  is a well known and respected economist.   That last fact she allows permanent tax cuts and one time credits to be conflated in this plan is at best, disingenuous and at worse political dishonesty.   In either event, obvious manipulation and misuse of accepted terms as these, calls wholly into question the integrity and accuracy of a plan that even according to its authors is fraught with:

uncertainty (that) is surely higher than normal now because the current recession is unusual both in its fundamental causes and its severity.

Republicans in Congress ought to be smarter than to fall for a one time credit that is called a “tax cut.”   They ought to be, we’ll have to see if they are.

2.5, 2.5 million jobs:

Obama outlines job-creation plan

 3.0, 3.0 million jobs:

 
Obama ups jobs goal to 3 million on bad economic news

3.5, 3.5 million jobs:

Obama: Stimulus will create 3.5 million jobs

And the latest:

Obama: Plan would create 4.1 million jobs

Clearly, President elect Barack Obama is “The One.”   There is no further discussion, the debate is over.   There must now be a consensus amongst the masses.    Not since the miracle of the loaves and fishes, have we seen an earthly being create any outcome desired simply with the imposition of an individual’s will.

Is Obama really that tone deaf or naive to not understand the credibility hit his already questionable plan takes, each time he announces a new  “outcome of the day?”

President elect Barack Obama made his first speech pitching the need for a massive government infusion to stimulate the economy.  

Parts of Obama’s speech sounded eerily like  statements made  last September as Ben Bernanke talked about the need for his bail out program.    Statements like:

We start 2009 in the midst of a crisis unlike any we have seen in our lifetime.  

I don’t believe it’s too late to change course, but it will be if we don’t take dramatic action as soon as possible.

and

We could lose a generation of potential and promise, as more young Americans are forced to forgo dreams of college or the chance to train for the jobs of the future. And our nation could lose the competitive edge that has served as a foundation for our strength and standing in the world.    

I’ve always been skeptical of the “don’t ask questions, just do as I say approach.”   While there are times when debate about how/if/when is not helpful, like when your house is on fire, most situations are not that way.   Most situations benefit from some discussion, debate if you like, amongst folks with varying perspectives.   In all but the most rare situations you will find that this debate makes for a better action and end product.

There’s a lot to not like about Obama’s proposed stimulus package:   the size of it, the increase in government employment, one time tax cuts that were proven last year to have little effect stimulating the economy.   However, there was a  statement in Obama’s speech that clinched my opposition to his plan.      A statement that was intended by Obama, to cause me to agree with his approach did just the opposite.   What was the statement?   It was near the end of his speech:

That’s why I’m calling on all Americans – Democrats and Republicans – to put good ideas ahead of the old ideological battles; a sense of common purpose above the same narrow partisanship; and insist that the first question each of us asks isn’t "What’s good for me?" but "What’s good for the country my children will inherit?"

Six months ago it is unlikely that many of us had ever used the word “Trillion” in a conversation without it meaning some astronomical amount that it was not credible; it was a charicature of a real number.   Today, the folks in Washington talk about trillions of dollars of debt in an off hand manner, as if there  were no repercussions or consequences to adding debt in multiples of trillions.  

It doesn’t matter who or what your are, an individual, a family, a business or even the government, there are consequences to excessive debt.   Unfortunately, the folks in Washington have learned nothing from the sub prime bust and see no problem with dramatically increasing the governments debt.   But, I do.

What Barack Obama doesn’t understand is that if we really did make this decision based upon what was good for our children, rather than what was good for us, we would not move forward with his stimulus plan.   This stimulus plan is focused on removing some rather minimal and at worst, inconvenient pain from us and loading a great big debt load, along with further government interference on the lives of the Shoelets.  

“It’s for the children” may make a good tag line if your campaigning to add a pool to the local high school.   In this case, if it’s really for the children, then don’t do it, they’ll do much better without it.

Dear President elect Obama,

Before you charge head long into this:

Obama Warns of Irreversible Economic Decline Without Action

Or this:

Obama predicts $1 trillion deficit ‘for years to come’

You may want to read, and seriously consider the implications of this:

U.S. debt is losing its appeal in  China

And this:

MAJOR FOREIGN HOLDERS OF TREASURY SECURITIES

Sincerely,

Concerned Taxpayer

Here’s the boil down folks:

As of the end of October, before the really BIG debt sales, the US had increased it’s borrowings from foreign countries by 32% or $743B.   Of that increase, China took 26%, The United Kingdom took 28%, Caribbean banking centers took 14% and the remainder was spread throughout the world including $46 B to countries noted as “oil exporting countries.”

Do you see anyone in the current list of buyers that looks like their economy is doing well?

Do you see anyone in the current list that you would expect to be able to not only maintain their current debt purchases, but with softening economies, double or triple their purchases of US debt?

If China, who currently buys 26% of our debt, decides to cut back, do you see anyone ready, willing and able to not only increase their current purchases but pick up China’s part?

Obama and his administration have become solely focused on “stimulating the economy” and have gone so far as to say that they are not concerned about the consequences.   Somehow they would have us believe that they will find a magic pill to deal with those consequences when they come up.   The problem with this thinking is that it is the exact thinking that got us into this situation.

When Alan Greenspan and Ben Bernanke kept interest rates abnormally low from a historical to fuel growth for the past 10 years they didn’t worry about consequences.   Frankly, they didn’t think there were consequences.   Turns out they were wrong.   Now we know there will be consequences and we’re  choosing to ignore them.

Fool me once shame on you, fool me twice….

President Elect Barack Obama gave an extended interview to CNBC today.   Much of the interview focused on the economy and the stimulus package.   The full transcript is here.   The size of the stimulus package was discussed in this exchange:

HARWOOD: It looks like it’s going to be at the high end of your range, around $775 billion.

Pres.-elect OBAMA: That’s correct.

HARWOOD: If it’s correct that, as your aides have said, the danger is doing too little rather than doing too much…

Pres.-elect OBAMA: Right.

HARWOOD: …why stop at $775 billion? Why not go to the $1.2 trillion that some economists have recommended? …

Pres.-elect OBAMA: Well, first of all I think it’s important to note that every economist, conservative or liberal, at this point agrees that we have to have a substantial recovery plan that helps to jump-start the economy, that short term it’s going to be expensive, but it would be much more expensive to see the economy continue in the tailspin that it’s been going in. We’ve seen ranges from 800 to 1.3 trillion and our attitude was that given the legislative process, if we start towards the low end of that, we’ll see how it develops. We are concerned…

HARWOOD: It’s going to get bigger.

Pres.-elect OBAMA: Well, we don’t know yet. But what we are concerned about is making sure that the money is spent wisely, that there’s oversight, that there’s transparency…   (emphasis mine)

Transparency and oversight are great but what’s this nonsense about starting at the low end and negotiating up?   Didn’t Obama just yesterday say:

“he will not allow Congress to attach any of those earmarks — lawmaker’s pet projects — to the stimulus bill.”

If no “pork,” “pet projects” or “earmarks” are added to the bill, and Barack has done his homework, how would the stimulus bill grow by up to 80% from what Obama is proposing?   Maybe Obama is taking Harry Reid to heart when he was quoted as saying:

I will tell him. "¦ I do not work for Barack Obama.