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You Call This Stimulus?

By Larry Johnson on February 25, 2009 at 1:54 PM in Current Affairs

If soaring Obama rhetoric were sufficient to spark economic growth then we would be safely on our way to a new era of riches and comfort. But talk is cheap and bullshit, even if described as savory chocolate mousse, remains nothing more than smelly cow excrement.

But before looking at some of the specifics of the stimulus bill there is this news today in the Washington, DC metro area–several prominent shopping malls–e.g., Montgomery Mall (which is two miles from me)–are opening later and closing earlier because there is not enough business.

This should scare the shit out of the Obama White House. Why?

The DC area, particularly Bethesda, Potomac, and Rockville, Maryland are considered wealthy, recession proof areas because of the plethora of government workers. Government workers are not being laid off. In fact, many are getting raises. So if businesses in an area flush with Government cash are suffering, look out. The economy is in worse shape than the media is willing to recognize.

Now check out the Congressional Budget Office (CBO) analysis of the stimulus bill aka American Recovery and Reinvestment Act of 2009 (ARRA).

Combining both spending and revenue effects, CBO estimates that enacting the conference agreement for H.R. 1 would increase federal budget deficits by $185 billion over the remaining months of fiscal year 2009, by $399 billion in 2010, by $134 billion in 2011, and by $787 billion over the 2009-2019 period.

The ARRA authorizes spending $379 billion dollars in FY 2009, which actually began on October 1, 2008. However, the CBO projects that only $120.1 billion will actually be spent during FY 2009. So in fact, only 32% of the funds allocated for “stimulus” are likely to be spent. So, the rest will be spent in FY 2010 (which starts on 1 October 2009)? Nope. The ARRA appropriates (i.e., authorizes for spending) an additional $114.7 billion. But the CBO predicts that only $219.3 billion will be spent in FY 2010.

To recap, Barack Obama has signed off on spending $493 billion in the next 18 months but we are only likely to spend $339.3 billion. In other words, only 69% of the money allocated for stimulus will actually be spent by October 1, 2010.

So what is this Porkulus bill going to buy us? Here is a list of just the first three pages of the bill:

$24 million for Agriculture Buildings and Facilities and Rental Payments for necessary construction, repair, and improvement activities.

$22.5 million Inspector General

$176 million for Buildings and Facilities for work on deferred maintenance at Agricultural Research Service facilities

$50 million for Farm Service Agency, Salaries & Expenses to modernize information technology

$145 million to Purchase and Restore Flood Plain Easement

$145 million for Watershed Flood Prevention Ops

$50 million for Watershed Rehab Program

$1 billion for Section 502 direct loans

$10.427 billion for Section 502 unsubsidized guaranteed loans

$67 million for Section 502 direct loans

$133 million for Section 502 unsubsidized guaranteed loans

$130 million for RURAL COMMUNITY FACILITIES PROGRAM ACCOUNT

$150 million for the cost of guaranteed loans and grants as authorized by sections 310B(a)(2)(A) and 310B© of the Consolidated Farm and Rural Development Act (7 U.S.C. 1932),

$1.38 billion for direct loans and grants for the rural water, waste water, and waste disposal programs authorized by sections 306 and 310B and described in section 381E(d)(2) of the Consolidated Farm and Rural Development Act

One thing is clear, this is a jobs bill for new Federal Government employees. More people will have to be hired just to administer and disburse these loans and grants.

Now, what does any of this have to do with helping people pay their mortgages or putting financial institutions back on their feet? Not a damn thing.

I challenge you to go thru the bill yourself. What you will see is a bill laced with Government programs that, at best, will have little positive stimulus for the private sector.

You call this stimulus?

  • Ellen D

    Thanks, Larry. What the heck is Section 502?

    • Mercedes

      This is the first Google link to Section 502:

      “Section 502 loans are primarily used to help low-income individuals or households purchase homes in rural areas. Funds can be used to build, repair, renovate or relocate a home, or to purchase and prepare sites, including providing water and sewage facilities.”

      I have always thought that concentrated urban development and neglect of rural areas is really, really, really stupid for this country’s long-range welfare, and I think rural development is essential, but if people are going to pay back these loans, they will need jobs, usually a rare commodity in rural areas. So where are the jobs going to come from and how can small communities hold on to existing jobs, I wonder.

      • Ellen D

        Thank you, Mercedes. I wonder also. I often have driven across the country and seen areas that seem to have no visible means of support, so I can’t see how this works unless it is an incentive to get factories to build in rural areas. But don’t we just end up with one-industry areas again?

        • cynic

          Doesn’t farming go on in rural areas? Don’t the people who operate them and the people who support their activities live there?

          • http://deleted Buzz Latte LaRue

            Rural development also comes with a nasty mother in law called urban and industrial sprawl.

            Infrastructure grants to improve roads, sewer systems, and the like are welcome. The rest of it is not. Most who live in rural areas do so because of the lifestyle. They either moved there to escape development or stayed there because they didn’t want to life five feet away from the neighbors.

            Also, the agribusiness industry needs millions of acres to do mother nature’s work.

    • PO’dVet

      In other words…Section 502 is the slush fund for Obama’s future Rezko type friend.

  • Seattle Moss

    Hey Larry,
    I didn’t hear anything in Obama’s speech that helps busnesses already in existence. In fact I heard further evidence that Obama want’s to punish these businesses with additional payroll taxes.
    Obama wants to experiment by starting his carbon tax at the very time business needs a break.

    Obama is dreaming to think he can save this economy by just having massive works programs…

    No wonder the market is down.

    • Ellen D

      I don’t even see any movement to get the banks back to normal with their business LOCs. They are stopped dead and continue to lie and say they are lending.

  • Diana

    The good news is, I read yesterday on Drudge that Nancy is proudly beaming that they’ve already drafted another stimulus package for 450 billion dollars!

    I’m livid. I found out yesterday that our home which we owe 325,000+ for is now valued at less than 100,000. Our mortgage company out and out lied to us, as long as we did the direct payment we’re supposed to get 1/2 a percent taken off our mortgage each year which they haven’t done now in 2 year. But, we haven’t complained because of the recession. Just doing our part to try and help keep the economy stable. What a pipe dream. This is the second year, and their butts are now asking for a bailout!

    Sick of it all. On top of that now we’re bailing out Hollyweird here in CA! We’ll give them a break and tax the crap out of the people of CA. Unbelievable!

    American Express paying people to close their accounts…it’s never going to end, because we have people in Washington helping themselves. Doing nothing but spend, spend, spend. No money, putting US further and further into debt. Their own pet projects as people are loosing their homes, jobs. Did these people download a script for the French Revolution?

    Can we please have the Republican’s back? I promise not to complain. Thanks for the great article Larry.

    • http://firefox AnnieCollier

      we’re supposed to get 1/2 a percent taken off our mortgage each year which they haven’t done now in 2 year.

      Not only should you complain, you should insist that they keep their contract. B of A Visa tried to double my interest rate last month and I accused them of the gouging they are doing…use our money for bailout and try to screw a good customer with high interest. I was surprised that they backed down and credited my account back with the over charges for the interest. They said that any future charges would engender the high rate. I said fine with me since I haven’t been nor will be using their card again. Selling my gently used Toyota too to finish off the car loan with them. Never again.

    • PamFlorida

      You left out the next BANK BAILOUT of ANOTHER $700 BILLION, the Omnibus Bill at $485 BILLION(a catch-all for every piece of pork they couldn’t sneak into bills before Obama), and the 2010 Budget that is projected to cost almost $4 TRILLION.
      Are they crazy??? Pelosi is grinning like the Joker in Batman, Rahm is rubbing his hands together with glee, Congress is aiding and abetting the rape of the American people, and the govenors are selling out for a few measly million without a clue as to the staggering consequences to follow.
      I need a flippin roof and my car engine replaced. Where’s my “stimulus”?

  • The Real HC

    Are you kidding? Montgomery Mall has reduced hours? Thats pretty scary…

    We are down about 30% over last year same period, and were in that very same area.

  • wodiej

    I surmised from the get go that these projects would not help the average worker who is out of a job. $13 a week is shameful. Is he SERIOUS??

    • Nocturnal Warrior

      Actually, they are serious. the 13.00 is not about you and your family. It is about the economy.

      The theory is that last time around when 600 dollar and 1200 dollar checks were being distributed that much of that money went to lump sum paying off debt or into savings. In other words, it did not go into stimulating the economy.

      The feeling is that 13.00 is so small, that you won’t save it or increase your debt payments by 13.00, so you will likely spend it. And if every American spends an extra 13.00 each pay check, that adds up to a fair amound of money being put back into the economy.

      I doubt it will work, as most government plans go awry, but that is the reasoning behind it.

      Normally, I skewer everything Obama does, but on the surface, I at least understand what they are attempting to do with that. Not that they have explained it well.

  • why lie

    I live alone and $13 just might pay for a couple of days of food.

    • Docelder

      But how much will the “carbon tax” raise utility bills, heating oil prices and fuel. We have already have a taste of what an effect like this has on our economy. It is not up for debate, we know.

      • why lie

        for the same amout of house gas usage as last year it went up almost $30 a month. So I guess my $13 a week will pay for my raise in utilities. My electric bill has also risen about the same.
        It also looks like my gasoline bill is going up too. Since Jan Gas in my are has risen over fifty cents a gallon.

  • J.J. (The P.U.M.A.)

    I would not have wanted to bet my second term on the success of the stimulus bill. The problem is not the size of the bill. In fact, maybe it needed to be larger. The problem is that there was very little bang for the buck.

    We spent close to a trillion dollars for about 200 billion in stimulus.

    • Docelder

      Maybe that is the single biggest reason we don’t want the government spending the money. We could have just gave Americans x dollars each worth of tax holiday. It would have probably sold some cars. But, it wouldn’t bring about “change”. So, if this were about stimulus it would have been so easy. But it isn’t about that.

  • HARP

    A good site to watch the money wasted:

    http://www.stimuluswatch.org/

  • Susan

    Where can we read the entire stimulus bill???

    • why lie

      I heard it makes a good sleeping pill

  • http://deleted Buzz Latte LaRue

    I’m gonna save the 13 bucks just to spite the clueless wonders in WA DC.

    • barry bums a ciggie

      Stuff the mattress…maybe in four years, you’ll have enough to buy our banks.

      • PO’dVet

        Actually in 4 years…you will have just enough to buy a new bedroom set. As long as it’s a cheap one that is!

        • Docelder

          Then again, in four years bread may be $13 a loaf… provided the store has any on the shelves. Because, somewhere in the in the confusion… the farmer may not be able to turn a profit growing wheat with what fuel costs. Or, his farm may be foreclosed and in the portfolio of some bank. Or, the trucking company may not be able to make the fuel payment. Or, the store may not be able to make payroll and rent. A lot can happen… a lot already has.

  • I’m a Linda too

    This is just so ridiculous. The only bright spot is with all BOberry’s hype, when only the debt swells and we get nothing for his massive spending, he will known as the Biggest Loser. Kinda’ like Losing on what normally would be unlosable.

    The Big Kahuna

  • beebop

    While the posters at ABC are not nearly as informed as those here, I found this on Jake’s current thread and just had to share it here …

    The details
    The details
    I love ya’
    The details
    You’re always
    a day
    away!

    —with thanks to Little Orphan Annie

  • Patrick Henry

    LC..

    No Matter how much I want to believe otherwise…When the Numbers are laid out as you have done…and listed what the POGROMS are…It always looks like this is some kind of Communist/Socialist Agendea whose foundation was laid by by all those ittle worker bee’s at Acorn and HUD who wanted to give Loans to every inqualified low or no Income Person in America Give em a House because they felt there should be a Movement to “ENTITLE” them..

    I saw the Hosing Bubble long before it ever Burst..P{ Price were Ridiculous.. The Value wasn’t there..and it just cou;dnt last..

    Why doesn’t anyone in the Media or on the business channel or in Congress focus on EWhat Rokle REALTORS and Local Governments Played in this Conspiracy of Greed and SEE NO EVIL..?? MONEY>>MONEY>>MONEY..

    I see nothing Good for the Middle Class and Small Business in this Package..

    I se Communal Farms for Mingrant Workers..and a Free and determined Bailout..for the Preferred “MASS’S.”

    The MSA..Mass’s States of America..

    Free at last…Free at Last..

    Thanks to “The One..”

    If the Air Stinks..It always because of someones “Garbage”..nearby…

  • http://firefox AnnieCollier

    Why doesn’t anyone in the Media or on the business channel or in Congress focus on EWhat Rokle REALTORS and Local Governments Played in this Conspiracy of Greed and SEE NO EVIL..?? MONEY>>MONEY>>MONEY..

    Couldn’t agree more. Tourists coming into Carmel from out of state always expressed amazement over the outrageous housing prices here. My comment usually was something like “Anyone who is fool enough to pay $1.2 to $2million for a 2 bedroom 1 bath ‘Carmel cutie cottage’ deserves to lose their money.” Greed was thriving on all sides. Realtors, original owners, buyers all cooperated to build a false housing market. Now, of course there’s a glut of sales inventory.

    This led to Carmel losing a lot of our sense of community. Last year it was announced that 70% of houses in Carmel were second homes unoccupied for most of the year. Consequently, on every street on any day of the week, you’ll see trucks of illegal Mexican workers maintaining the landscaping, etc. No restaurant would be open without their Mexican workers. These are all jobs our kids used to do…and jobs that my landscaper grandson, born in Carmel, would take in a heartbeat. He’s fortunate that his jobs usually come by word of mouth but still…

    I can’t say I feel bad for these people.

  • Miss H

    Obama’s goal is to break the back of the middle class and destroy private initiative. He wants to be the saviour; nobody gets anything except thru the annointed one, who distributes the wealth thru the massive government. If you like Chicago, with everyone living in the projects and Obama living in the mansion; you are goiong to love the USA in the coming years. Guess where you will living and who you will be begging for a handout. Support state sovereignty now!

    • cynic

      Why would he want to do that?

      People keep making these extreme and inflamatory assertions but they never explain the reasoning behind them. I suspect that’s because they reduce down to several underlying premises very few thoughtful Americans would accept.

      • Mutiny on the Mounds Bar

        It’s what he did before. Sen. Obama earmarked $100 million to Tony Rekzo, his political godfather. Then 11 Rezko buildings were condemned in his district. Tenants froze to death in the winter. Little Curtis’ skull was crushed by a rusty gate. Obama lived in a mansion, Michelle’s salary tripled with no additional responsibilities and his daughters went to private school. His constituents’ children were lucky to make it to school alive and receive their inferior educations, courtesy of Obama and Ayers’ failed Annenberg Challenge.

  • Patience

    Larry, simply by listing features of only the first 3 pages of the “stimulus” bill, you’ve exposed its truth and intent: it’s a huge remittance for services rendered.

    Obama is paying off his patrons, rich and poor, and the rest of us (mainly in the middle class and private sector) can instead look forward to taking it up the posterior. The administration is going to have to borrow so much money to pay this bill that credit will be even tighter for businesses and individuals. If he keeps this up we’ll all have to work on the government plantation eventually. Personally, I’ve been there and done that and my experience taught me that a very small percentage of public employees end up doing all the work while the rest just take up space.

    His mortgage rescue is just as scary. While it claims that credit worthiness will be a factor in qualifying for assistance, the provision that applicants can qualify due to a crisis beyond one’s control seems purposefully and sufficiently vague. For instance, will lack of credit-worthiness be forgiven due to race, chronic unemployment, single-parent status, non citizenship, etc?

    A scene from the film Saving Private Ryan keeps running through my mind whenever I read or hear about the POTUS’s great speechifying: I’m reminded of the German soldier who sweet-talked his victim as he slowly slipped a big knife into his heart.

  • Chris

    Larry,

    The CBO lettter you quote also says:

    “The letter, sent yesterday to Sen. Judd Gregg and copied to eight other leading legislators, estimates that the bill would stimulate the economy the most in 2010. By the end of that year, the analysis estimates, 1.3 to 3.9 million jobs would be created. The unemployment rate would be 0.7 to 2.1 percentage points lower than the 8.7 percent forecasted. And GDP would increase from 1.2 to 3.6 percentage points over a baseline forecast.”

    the CBO also says there will be a bounce in the GDP in 2010 from the stimulus.

    see chart here: http://cbo.gov/doc.cfm?index=9957

    No point on arguing about what you think is pork and what I think is stimulus. One man’s pork is another man’s stimulus.

    What is important is does the plan create jobs and have the chance at kick starting the economy. The CBO says “YES”.

    Hard to really know what will happen, as the economic problems are so vast. Also, the plan will likely be fluid, as TARP was, and will be adjusted according to circumstances. However, this is only one part of a three part attack, with the other parts being the mortgage plan and the bank stabilization.

    Hard to come up with the right policies, as we are in uncharted territory, but I have yet to hear a better alternative from either McCain or the Republicans. The adminstration will be critized no matter what they do.

    • PamFlorida

      You need more information.

    • Wisewoman

      Chris. Please do the math! Taking the CBO’s estimates for the 787 billion package, I hope you are aware that if the bill creates 1.3 million jobs the cost per job is $605,385. If 3.9 million jobs are created the cost is $201,795/job. In spite of all the spin about the breakdown can not be handled in a static way of calculating this, one’s objective sense would indicate that this is INSANE!! We Americans are insane if we allow these people to pull the wool over our eyes in some quake doctor type way.

  • The Lochner Era

    This is spending out of control.
    It will do very little to encourage growth and entreprenuership which is the engine of the American economy. Thanks Larry!

  • Sassy

    Shocking!
    I didn’t realize that D.C. royalty shopped in malls!

    Newt Gingrich commented that parents should tell their kids to forget medical and law degrees…go for secure government jobs!

    • Mutiny on the Mounds Bar

      Government jobs can be worse than unhappy marriages. You work and work with miserable people, no vacation, no promotions, just a pension. The only way you get to transfer out, if you hate where you are, is if someone else retires, gets fired or quits. Openings are few and far between, not to mention privileged information.

  • http://deleted Buzz Latte LaRue

    The more I hear about this debacle Obama has signed off on I think it sounds more like a SCREWYOULUS package.

  • EWard

    Larry

    Excellent post! I want to take my time to go through these numbers. However, could you do something about these trolls? Throw them under the NQ bus………….

  • Patience

    If this administration keeps it up, we’ll all have to work on the federal plantation before long. Government will have to borrow so much money to fulfill the terms of the stimulus bill that credit will be even harder to come by for businesses and individuals. And don’t forget Congress is working on yet another big spending bill. And the more serious issue of the credit crunch hasn’t even been addressed yet — the POTUS and Congress have been too pre-occupied with their spending spree.

    PLUS, the mortgage bailout will place even more burdens on taxpayers and the banking industry. It’s occured to me that in spite of the provision that mortgage bailout applicants must be credit worthy, another provision that allows eligibility based on crises beyond one’s control seems purposefully vague enough to include things like race, non-citizenship, single-parent status, chronic unemployment, etc.

    By showing us just the first 3 pages of the bill, Larry has exposed the truth and intent of it: it’s a huge remittance to political patrons rich and poor for services rendered to the POTUS.

    I was a government employee long ago (social worker). It was my experience then that a very small percentage of people did the work while most others merely took up space and collected their pay and benefits. I wonder if times have changed since then?

  • Linda C.

    I am not ready to scream at the stimulus bill yet. It is going to be up to the states to spend allot of this money. So we will see what the states do with it.
    What gets me is that Govs like Jindal don’t want money for unemployment benefits because they cover part-time workers. The era of full time work with benefits left us about 7 years ago. Many people are hired at 32 hours a week so the company can skip paying benefits. When they loose their job they don’t get unemployment either.

  • Patience

    SO, yet another huge spending bill is in the works on top of the “stimulus” bill. At this rate, there won’t be any money left for the private sector to borrow. We’ll all end up working on the government plantation sooner or later. For me, been there, done that when I was a social worker way back when. It was my experience then that a very small percentage of people actually worked while the majority of employees merely took up space and waited for quittin’ time.

    I’ve read a lot of concern about middle-class mortgage defaulters getting unfair breaks due to the proposed bailout. But while there’s a provision that says applicants must be credit worthy, there’s a caveat: crises beyond one’s control can assure eligibility. This seems purposefully vague enough to possibly include factors like race, non-citizenship, single-parent status, chronic unemployment, etc.

    I don’t believe for a minute that raising taxes on those who earn over $250,000 will pay for all of this spending. And it doesn’t even include the lavish agenda the POTUS proposed in last night’s speech.

    He and Congress are so busy with their spending spree that they haven’t sufficiently addressed the economy’s worst problem — the credit crisis. It’s no wonder — they’ll be the only ones in a position to borrow before they’re finished stimulating us up the posterior.

  • C.S.

    This “stimulus” is like those Greek columns in Denver; they made a pretty picture but hid an ugly process. Unless the unknown, untried Mr. Soertoro/Obama listens to someone who knows more than he does he’s going to find his pretty picture of money piled on top of a styrofoam foundation collapsing under the weight of an ugly system dependent upon the U. S. taxpayers who no longer pays into the treasury because they are jobless.

    And anyone who doesn’t know what happens to an economy in collapse needs to do a little research. The U.S.S.R is our most recent example but there are many who show when a country is as economically unsound as we now are, blackmarkets become the economy. And close behind them comes crime and a barter system to fund it. And Chicago pol Obama knows this; he lives in a mansion purchased outside of our economic system. Will that be Soertoro/Obama and the Democratic “legacy”?

    Name one person in our present government with the will and power to prevent this “trickle down” theory of Regan’s administration that Soertoro/Obama admires. And don’t forget that in spite of the Depression safeguards on banks, the Reagan administration, aided by the Bush boys, brought down a banking system that cost U. S. taxpayers trillions of dollars. Deja vu anyone?