The 4.6% Truth: How Absurdly Small Stimulus Spending Really Is

[balantz]

The 4.6% Truth: How Absurdly Small Stimulus Spending Really Is

by: David Sirota
Mon Feb 09, 2009 at 17:17
http://www.openleft.com/showDiary.do?diaryId=11483


Conservatives have spent the better part of a generation complaining that spending on social programs is what's responsible for the massive deficits their outsized defense budgets and tax cuts have created. Mathematically, it's as absurd a line of thinking as ignoring government data and insisting that the New Deal exacerbated the Great Depression. Indeed, non-security spending by the government is relatively tiny. But that doesn't stop the right from claiming otherwise, because their argument serves their political goals: It lays our country's fiscal problems at the feet of the middle- and working-class that benefit from social programs but have a far smaller voice in the political process than the political donor class (which benefits from big defense contracts and regressive tax policy).

Now, as the debate over the economic stimulus has intensified, these same conservatives have simply updated their argument, insisting that our government is too focused on spending money on social programs. But a look at the numbers shows just how idiotic that claim really is.

Bloomberg News today reports that if/when the stimulus bill passes, the federal government will, in sum, be on the hook for $9.7 trillion in total financial commitments to solve the economic crisis. Out of that, roughly $450 billion of that is the direct spending in the stimulus bill (58% of the $780 billion stimulus is spending - ie. $450 billion - while the other 42% is tax cuts). The rest is a mix of cash given to the banks (TARP money), FDIC guarantees for losses, and Federal Reserve Bank loans/swaps.

In other words, out of the $9.7 trillion our government is putting on the line to deal with the economic emergency, just 4.6% of it is actually being allocated to direct spending on social programs. The other 95.4% is going to either tax cuts (many of which tilt to the rich) or directly to the financial industry.

- snip -

While some Obama administration water carriers are claiming with a straight face that the current stimulus is a landmark triumph for progressivism, the New York Times Paul Krugman is far more honest and accurate, noting that the public at large should be utterly outraged that just 4.6% of the government's emergency spending money is being devoted to helping the public at large.

Of course, that doesn't mean the stimulus bill should be rejected, even in the overwhelmingly mediocre state it's in - but it does mean that we should have a little perspective and stop judging everything by conservatives' know-nothing parameters.

Yes, it's great that the government is going to spend something on public priorities - that's a step forward from the Bush era. But 4.6% is a relative pittance of progressivism in an ocean of continued kleptocracy. It's the absolute least that should be spent on health care, energy and jobs programs - and we should use this fleeting moment of legislative negotiation to demand far more.

[BirminghamExaminer]

1. If I had my way, there would be no tax cuts in the package.

[Still Sensible]

2. Two important points

One, middle class tax relief was a cornerstone promise of the Obama campaign and this goes some ways toward keeping that promise. And this tax relief is not in the form or favoring the wealthy as Bush's tax cuts have been.

Second, it is more than a little disingenuous to make this claim before seeing what the second half of the TARP funds get spent on. Reportedly a significant portion of those funds will be used to protect homeowners from foreclosure and deal more directly with the mortgage crisis.

I would like to know how the $9.7 trillion figure was arrived at.

[Zodiak]

3. The Fed's involvment was added, too

I remember a couple of articles that talked about how big the bailout really is in total dollars without dividing sources, and it was over 7 trillion. But yes, this article is being a little disingenuous about how it arrived at it's denominator. The reality is....the spending on social programs compared to the two bailout funds provided by congress is about 20%. Still paltry. It could be as much as about 45% if the rest of the TARP funds go to homeowners about to lose their homes. Yes, that money will eventually go to the banks, but only after it is credited to the borrower's account....that sounds like social spending to me.

The stimulus plan is not going to be a panacea, but it will help. It'll take more, and we will have to drag the Republicans kicking and screaming to get it done.

[Still Sensible]

4. Well said

and thanks for the explanation.

[hay rick]

5. lending not spending

Most of the money is the outstanding loan balances of the fed's liquidity facilities. These numbers generally cited as a scare tactic IMHO.

[Still Sensible]

6. Thanks

[Two Americas]

7. there is no middle class anymore

The problem with talking about helping the middle class is that there is no such thing.

The bottom 60% of the people should be paying no taxes at all. Their incomes are too low for tax cuts to help very much. None of those people (we people) are "middle class" anymore in the sense that the term once meant, not by a long stretch.

We could eliminate taxes completely to all of those people, and easily make it up by fairly taxing the wealthiness 1% for a change. That would have enormous public support, and no Republican could stand against it without placing their career at great risk.

It all depends on whether or not we are going to fight for the people, and rebuild the country and the economy, or if we are going to play footsie with the right wingers for the benefit of a relatively small number of people - the "progressives" and "liberals" who are in, or identify with those who are in the upper 10% income bracket, who now dominate the national political discussion on what passes for the political Left.

[Still Sensible]

8. No, go to Mexico, there you'll see a country with no middle class

here we do have one. Is it shrinking, you bet. Is it much smaller (and the poor category larger) after the last eight years. Absolutely.

[Two Americas]

9. those comparisons are not helpful

Mexico has a gentry, and so do we. That is not a middle class, agreed. But in terms of wealth and income, there is as big of a gap here between the top 1% and the bottom 60-70% as there is there. People make more here, but it costs more to live.

I agree that things could get worse here. That is the problem.

[Still Sensible]

10. I stand my ground, that comparison is very helpful

it gives perspective, which is often missing here. When someone says that "there is no middle class here" it comes off as a credibility injuring overstatement IMO.

[Two Americas]

11. not all comparisons are bad

Compare the gap. Comparing in absolute terms, rather than relative, is a common anti-Labor argument that is used to defend entrenched wealth and economic injustice.

What your argument says, in effect (from anything other then a right wing political perspective) is that people here shouldn't complain about being robbed, because people in other countries are being robbed worse.

[Still Sensible]

12. That's the problem

I said nothing of the sort. What my only point is... when you make a statement that says there is no middle class here, it is not accurate. Someone reading that statement without the context you are adding will view whatever point you're trying to make as less credible.

Actually what my argument is saying is that if we don't correct the economic injustices we face today, we could go the way of Mexico and have no middle class.

[Two Americas]

13. understood

You are making a good point.

"If we don't correct the economic injustices we face today, we could go the way of Mexico and have no middle class" - agreed.

"For all practical purposes, and compared to what once was true and should be true, there may as well" be no middle class anymore. That is more accurate, no doubt.

[Baby Snooks]

14. Mexico's "worker class"

That is the middle-class in Mexico. The "worker class" which is the lower class. It does not include the poor. Who simply do not exist.

And most of the poor of Mexico have come here. And are becoming part of our middle-class. The problem is they are displacing our middle-class and creating a new "worker class" in this country. One which sets "prevailing wage" and which works for longer hours and without benefits. Many of us are becoming the poor. Who simply do not exist.

Where will we go?

[Baby Snooks]

15. An absolute pittance...

"But 4.6% is a relative pittance of progressivism in an ocean of continued kleptocracy."

It is an absolute pittance. An insultingly absolute pittance.