This was from a story in The Washington Post:
In testimony before the House Budget Committee yesterday, Alice M.
Rivlin, who was President Bill Clinton's budget director, suggested
splitting the plan, implementing its immediate stimulus components now
and taking more time to plan the longer-term transformative spending to
make sure it is done right.
"Such a long-term investment program should not be put together
hastily and lumped in with the anti-recession package. The elements of
the investment program must be carefully planned and will not create
many jobs right away," said Rivlin, a fellow at the Brookings
Institution. The risk, she said, is that "money will be wasted because
the investment elements were not carefully crafted."
It's not a puffin, but here is a good post on the stimulus from Arnold Kling. And read Marc Ambinder on which parts of the bill will take how long.
Excellent puffin pic!
This is where I get annoyed at the Obama team’s much vaunted “transparency.” What is their response to these arguments? I’m sure they are thinking about them or have thought about them, but why can’t we just hear what they are thinking?
Of course, if you are fully open and honest about the shortcomings of your proposal, you run the risk of weakening its prospects politically. That is a central problem of politics and it is why “transparency” is so hard to do.
On the other hand, one could argue that Obama’s moving a big aircraft carrier and in some ways he has been more transparent. But I think he could go much, much further. His entire brand is built around doing things differently. Why not be fully forthright about all the arguments, pro and con? Why not post responses on the White House blog?
The problem is that without such transparency you make bad decisions. Politicians want power, but the more power they hold onto, the more they screw things up.
The complication is that in the long term voters reward you for competence. If Obama is really playing chess he should have his advisors engage the critics more directly.
I am starting to think that Tyler is trying to work up to blogging about birds. Maybe he has seen Bruce Schneier’s blog about security and likes the Friday Squid Blogging segment.
This approach is not conducive to the legislative process. A better one is to create and fund an agency or commission to collect and sort out proposals and prioritize, plan, and organize the response.
What Rivlin says is obviously true: make the stimulus package strictly about stimulus right now and leave the investment portions for later. This will not only provide enough time to figure the best approach to the investment bill but will make the stimulus package much simpler (which will make it easier to understand and evaluate) and cheaper.
The stimulus package should be things that are done in 2009. What further stimulus is required in 2010 and beyond will depend on how the economy is doing at the end of 2009. There is no need to be in a rush to decide on 2010 stimulus spending and even less need to rush on investment spending.
It would also be good if the administration would produce a technical explanation of exactly how we got into this mess before we throw money at the problem. If it is true that the primary problem is a banking problem, shouldn’t the focus be on fixing those problems first or at least at the same time as working on the stimulus package?
The head of the IMF said that he was concerned that the USA has still not moved aggressively to disclose and deal with the bad loans that have triggered this crisis. He said the IMF has dealt with over 160 banking system disasters in various countries over the years and that the most critical step in solving the problem was always transparency in revealing the exact extent and details of the loan problems. He also suggested encapsulating these loans into a “bad bank” (such as the RTC in the S&L crisis). This approach reestablishes confidence in the banks that are still operating.
Obviously the standards for real estate loans need to be tightened immediately. IIRC, real estate loans are the largest single source of collateral in our banking system. We have to take a more conservative approach to real estate loans (no more 0 down variable rate loans that depend on market appreciation to work).
The rush to spend the better part of a trillion dollars without taking the time to thoroughly understand the implications is unwise. It is an attempt to take advantage of panic in the electorate to pass agenda legislation that is not directly related to 2009 economic stimulation.
Well, actually, I am not really sure that long-term investements that are not hurried through, but “fought” over a long time, are really that much better =) From a libertarian view they are better, because there is a chance that in the future, the policy might not make it.
And from the rent-seeking side it is better, because money spent later is less worth than now =) HOwever, most likely, they will just spend more of the more worthless money =)
I find it hard to believe that longer time in the making = higher quality. Are there any indicators (papers etc.) for this assumption?
What is the specific economic theory that shows a net positive increase in aggregate demand, without adversely affecting private investment
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