6 thoughts on “Where will the stimulus money go?”

  1. We are [1] and will be [2] spending some money sensibly. But much of the stimulus will be wasted, and we need to fix the structural problems that got us into this mess [3], and may create another one soon [4].

    So far in this, the Democrats are the party of ideas and the Republicans are the party of a do-nothing minority in Congress [5]. This is not good for the party, or the nation.

    [1] http://domesticfuel.com/2009/01/16/usda-provides-loan-for-cellulosic-ethanol-plant/
    [2] http://domesticfuel.com/2009/01/16/obama-makes-case-for-wind-other-renewables/
    [3] http://www.tdaxp.com/archive/2009/01/17/bailout-logic.html
    [4] http://www.gmgdesign.com/go/?p=404
    [5] http://www.tdaxp.com/archive/2009/01/16/on-the-other-hand.html

  2. State Relief. Someone please explain what this is. We are a Union of States. If a State cannot relieve itself, why shall be believe that the Union of States can do any better? Obviously, I believe that — with several exceptions — anything the Union can do for the States, the States can do better for themselves.

    Tax Cuts. My small head feels like a gyro, being spun on two axes. Since a stimulus comes from (future) taxes, how could any sensible administrator consider using such stimulus for a (current) tax cut? Isn’t that like borrowing money at the prime rate and then “investing” it at the going savings rate? It’s worse than a neutral transaction protracted over some unspecified payback period. If 40+% of the stimulus is slated for “Tax Cuts”, why not reduce the stimulus amount by that same 40+% and call it even?

  3. I’m skeptical of the stimulus plan, but Moon asks some valid questions that deserve answers.

    State Relief. Someone please explain what this is. We are a Union of States. If a State cannot relieve itself, why shall be believe that the Union of States can do any better? Obviously, I believe that — with several exceptions — anything the Union can do for the States, the States can do better for themsel

    Article I, Section VIII, of the Constitution gives the federal government authority to do several things that the state’s can’t do, such as raising an army, funding a navy, running the post office, and so on. While both the federal government and the states are sovereign, the federal government has reserved powers the states do not.

    Further, the United States economy as a whole is a large-economy, with much greater impact on the world, than the individual state economies that compose it. What may be individually rational for California, Wyoming, and so on, may be foolish collectively.

    Tax Cuts. My small head feels like a gyro, being spun on two axes. Since a stimulus comes from (future) taxes, how could any sensible administrator consider using such stimulus for a (current) tax cut? Isn’t that like borrowing money at the prime rate and then “investing” it at the going savings rate

    The thinking is that stimulus spending will “crowd-in” private investment: That is, the amount spent will encourage others to spend and invest, instead of keeping money under the mattress, simply investing in treasuries, and so on.

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