3rd Stimulus Package?

[Michael]

It seems like there is increasing noise from the 'chattering' classes about the need for a 3rd stimulus plan.

Note: I count Bush's first 'rebate' stimulus as the first stimulus plan, the $800 billion package as the second. That makes this one the third. Don't get confused - the 'liberal' media likes to systemically forget that Bush was ever President and thus, his tax cuts and massive spending increases don't actually exist. Niether does the fact that Bush mailed out stimulus checks or that the original bank bailout was orchestrated by the Bush Administration.

Anyway, my point is that this is getting real ugly. The purpose of a cyclical recession is to cause companies to fail and workers to be laid off so that capital and workers can be re-directed to more efficient companies in more robust sectors. Government stimulus funding is designed to prevent this from happening and to subsidize weak companies with easy extra sales they are not capable of themselves.

And the US economy has been operating as a 'bubble-economy' for a couple of decades now. The recession that is happening right now is not just a normal cyclical recession that can be flattened with stimulus. This recession is clearly a structural one. Past US success at stimulating recessions has just put off paying the piper. Trying to do that again now is a fool's game.

Doesn't anyone realize that there is no such thing as "temporary spending" from a government? Does not anyone remember that income tax was introduced as a "temporary measure" to pay for WW1?

And if the Social Security surplus was properly accounted for, the US deficit would be seen to be considerably higher than it already is. There is no way in the world the US economy can survive with the government running deficits equal to 10% of GDP per year (as the US is this year and will likely do so for the rest of Obama's first term).

The US economy is not going to put up 5-6% GDP growth figures for the next half-dozen years in a row needed to address that problem without major spending cuts and tax increases (both of which are nearly impossible due to US domestic politics).

Having Obama aiming for an ambitious increase in US social spending at the same time as massive stimuls spending and massive giveaways to the banking sector is a recipe for serious long term financial decline for the US economy (especially given that the banking crisis hasn't been solved at all - only a big fat bandaid has been put on it).

[Americano]

It seems like there is increasing noise from the 'chattering' classes about the need for a 3rd stimulus plan.

Note: I count Bush's first 'rebate' stimulus as the first stimulus plan, the $800 billion package as the second. That makes this one the third. Don't get confused - the 'liberal' media likes to systemically forget that Bush was ever President and thus, his tax cuts and massive spending increases don't actually exist. Niether does the fact that Bush mailed out stimulus checks or that the original bank bailout was orchestrated by the Bush Administration.

Anyway, my point is that this is getting real ugly. The purpose of a cyclical recession is to cause companies to fail and workers to be laid off so that capital and workers can be re-directed to more efficient companies in more robust sectors. Government stimulus funding is designed to prevent this from happening and to subsidize weak companies with easy extra sales they are not capable of themselves.

Unfortunately for the US, capital investment to produce value added goods and services has migrated to countries with far lower standards of living than that of the US bloated by personal debt, targeted asset inflation and out-of control defense spending based on debt. That leaves only the US government utilizing public debt to prop-up banks, GM and other gross failures who need to die to clean the commercial gene pool.

And the US economy has been operating as a 'bubble-economy' for a couple of decades now. The recession that is happening right now is not just a normal cyclical recession that can be flattened with stimulus. This recession is clearly a structural one. Past US success at stimulating recessions has just put off paying the piper. Trying to do that again now is a fool's game.

Doesn't anyone realize that there is no such thing as "temporary spending" from a government? Does not anyone remember that income tax was introduced as a "temporary measure" to pay for WW1?

And if the Social Security surplus was properly accounted for, the US deficit would be seen to be considerably higher than it already is. There is no way in the world the US economy can survive with the government running deficits equal to 10% of GDP per year (as the US is this year and will likely do so for the rest of Obama's first term).

The US economy is not going to put up 5-6% GDP growth figures for the next half-dozen years in a row needed to address that problem without major spending cuts and tax increases (both of which are nearly impossible due to US domestic politics).

Since the US is running negative 5-6% GDP with greatly increased government spending the whole thing becomes a bad joke on the public.

Having Obama aiming for an ambitious increase in US social spending at the same time as massive stimuls spending and massive giveaways to the banking sector is a recipe for serious long term financial decline for the US economy (especially given that the banking crisis hasn't been solved at all - only a big fat bandaid has been put on it).Same old toxic assets are sitting on their balance sheets at book, not market value while they now herald profitable quarterly earnings. It doesn't take an accountant to understand why foreign investment in the US and facilitation of US debt by foreign countries has rapidly declined.

[Michael]

It has been quite surreal reading political and economics news this last week or so.

On the one hand, I keep seeing various members of the 'left-blogosphere' praising how well the stimulus package has worked so far and strongly arguing in favor of yet another similar sized stimulus spending package.

On the other hand, I keep reading various economics articles that point back to the 2000/2001 period at the end of that earlier business cycle and how Greenspan's monetary policy served as a stimulus plan and how that managed to avoid most of the harmful effects of that recession phase - and how this has a lot to do with the severity of the mess we are in right now since all Greenspan did was transfer the dot.com bubble over into the housing market.

And the late 1990s had the Enron accounting fraud and the dot.com boom in high gear. This would have been a really good time to have engaged in some serious regulatory reforms... and a much tighter monetary policy.

But no, instead, we got a Keynesian monetary expansion policy to 'fight' the recession. The result was the housing asset bubble and the present banking crisis.

Now that housing asset bubble has popped and there is no other asset market available to play with, we have a 'true' banking crisis. Pumping up the consumer market with artificial stimulus demand is just another attempt to apply Keynesian theory as a method of avoiding the harm from recessions.

I respectfully submit that 'economic harm' from recessions are necessary for the effective operation of capitalism. If we keep insulating the market from the downside of capitalist markets, the market is going to act increasingly irrational and non-functional.

I was opposed in principle to the stimulus spending package. I only supported federal funding to the States to offset the State-spending contraction that comes from their heavy reliance on sales-tax & construction permit revenues. Having State Governments (like California) contract during a recession is silly and stupid. Increasing the 'Food stamps' program is also a proven US program for mitigating an increase in bottom line welfare issues. These are the only federal spending programs I will support in a recessionary position. Anything else is economically inefficient and wasteful. The taxpayer ought to be under no obligation to ensure that private markets are profitable.

[Lily]

Then we need to fix health care, because as the economy retracts and people lose their jobs, they also lose their health benefits. Yes, there is COBRA, but it is prohibitively expensive and last only 18 months. Without insurance, the unemployed come to the ERs and that is putting an even bigger strain on our nation's emergency rooms. We all end up paying that bill.

[The Drunk Girl]

Then we need to fix health care, because as the economy retracts and people lose their jobs, they also lose their health benefits. Yes, there is COBRA, but it is prohibitively expensive and last only 18 months. Without insurance, the unemployed come to the ERs and that is putting an even bigger strain on our nation's emergency rooms. We all end up paying that bill.

I'm going to get back up on my soapbox with being a student. I firmly believe that there needs to be some kind of reasonable insurance for those that are furthering their education. I had insurance under my Mother, until the age of 23 as long as I continued to stay in school. Being a dumbass that I am, I screwed up my first collegiate experience and was left without insurance and haven't had it since. On the other hand, 2-3 months back, my Mother's job cut the program that she was over...the company was a non-profit. I am currently 23 and would have wound up going almost a year without insurance anyways, but I guess one year is better than almost five.

Since I haven't been provided insurance through my Mother, there has been no way in hell that I could have afforded insurance (or the loss of income) even when working full-time and living at home.

A few years back, I wound up passing out a work. I had been having some spells here and there and sending me to the ER was the only option left. Upon arriving, I had another spell and was quickly rushed into a room. The damn ER gave me every fucking test possible, even when I tried to explain that my blood pressure was higher than my norm. I was X-rayed, had a CATscan and an EKG, along with a blood and pregnancy test. I ended up with a $7,000 bill, and almost a $1,000 due to the doctor I didn't see for 5 minutes, who told me I had hypoglycemia (something that couldn't have been right either considering that was the first thing the nurses at work checked).

I had no insurance and didn't qualify for any type of payment plan and/or assistance. Naturally, it went to collections and I wound up consolidating my debts and took a loan out through the bank. Now instead of paying $200/mo. for just the ER bill alone, I pay a little less than $100/mo to the bank.

There is a campus doctor to go see that is free, but you still have to pay for your prescription if you need one, and they don't offer other care such as dental and optometry.

[The Drunk Girl]

My Mother was given a packet on COBRA after her program shut down and she said there was no way she could afford it. She receives maximum unemployment and was given a nice severance package as well and there was still no way...

In mentioning how her grandparents had once said that the US Healthcare system was not set up for the traditional family, but more for the non-traditional ones, she went on to explain this... that her and my step-dad would be better off if they divorced and still lived in the same house: my brother and sister would qualify for assistance and be covered, and it would "free up" more of my Dad's income. It's a shame that families seem to think their options are, or would be better by taking extreme and drastic measures like that.

(However, I don't think my family would go through with something like that).

[Americano]

My Mother was given a packet on COBRA after her program shut down and she said there was no way she could afford it. She receives maximum unemployment and was given a nice severance package as well and there was still no way...

In mentioning how her grandparents had once said that the US Healthcare system was not set up for the traditional family, but more for the non-traditional ones, she went on to explain this... that her and my step-dad would be better off if they divorced and still lived in the same house: my brother and sister would qualify for assistance and be covered, and it would "free up" more of my Dad's income. It's a shame that families seem to think their options are, or would be better by taking extreme and drastic measures like that.

(However, I don't think my family would go through with something like that).

If the man isn't the legal father of the children it would be the smart financial thing to do.

Long ago my wife was diagnosed with Hepatitis C after back surgery. At that time the fatality rate was around 90% with conventional treatments. A new at the time product (an injection which became the standard but so long ago I can't remember the name) was being tested and she was invited to be a member of the test group. The cost of the treatment was thousands of dollars per week with a projected 18-month treatment period, not covered by insurance.

Our assets were in a trust so we took her name off the trust and divorced. She then qualified for public assistance which included medical care and the attending MD qualified her for a grant to cover the cost of the medication, which was not approved for public assistance. She recovered and we remarried.

Had that legal option not been available the alternative would have been complete financial disaster.

[Michael]

I've said it before and I'll say it again - the BEST feature of Canadian Healthcare is the fact that I never, ever have to think about the topic. It just doesn't exist.

That peace of mind is certainly one of the best features of the system. No one will ever cut off my coverage, deny my coverage or cause problems if I change jobs. Indeed, I can't imagine how infuriating it must be to pay health insurance premiums and have that insurance deny coverage only when you need it.

[Lily]

Workers in the U.S. have been lulled into a false sense of security with employer-based health insurance. They are afraid of changing that system because as long as they have the job it works for them. It's whistling past the graveyard. Lose the job, get sick, and you'll see just how quickly people change their minds.

What I fear out of all this reform is that it won't go far enough, that it will be some piecemeal plan tacked together by legislators who are too chickenshit to truly address the myriad problems we face. More and more, I'm leaning toward a single-payer plan open to everyone. If my taxes increase to pay for it, then okay. As Michael pointed out, peace of mind would be worth every penny.

[The Drunk Guy]

Workers in the U.S. have been lulled into a false sense of security with employer-based health insurance. They are afraid of changing that system because as long as they have the job it works for them. It's whistling past the graveyard. Lose the job, get sick, and you'll see just how quickly people change their minds.

What I fear out of all this reform is that it won't go far enough, that it will be some piecemeal plan tacked together by legislators who are too chickenshit to truly address the myriad problems we face. More and more, I'm leaning toward a single-payer plan open to everyone. If my taxes increase to pay for it, then okay. As Michael pointed out, peace of mind would be worth every penny.
I would like to see a buy-in plan. Full coverage premiums would be based on income while a supplemental plan, for those of us with private insurance, would have a low, flat fee.

[Michael]

I would like to see a buy-in plan. Full coverage premiums would be based on income while a supplemental plan, for those of us with private insurance, would have a low, flat fee.

The problem with this type of approach is that the paperwork needed to administer that 'buy-in' plan - and the appeal process needed to deal with such issues creates a huge bureaucracy that is almost as big a drain on resources as the insurance companies are.

That's one of the main reasons Canada maintains a 'one-size-fits-all' program. There are no options and it applies to everyone all the time. No bureaucracy to handle the paperwork if there isn't any paperwork.

People can and do purchase 'supplemental' health insurance for travelling, private hospital rooms, extended care and/or loss of income due to sick/injury. But all your basic healthcare coverage is completely covered.

As for US private employer-provided healthcare, it has been suggested that all of the wage increases you might have gotten over the last twenty years has been sucked up by the astronomical rising costs of the employer provided healthcare insurance that you are so happy with. That insurance forms part of your paycheck and the reason employers like it is because it tends to 'lock you in' with them and not seek employment elsewhere. That's their benefit, not yours.

[Americano]

Workers in the U.S. have been lulled into a false sense of security with employer-based health insurance. They are afraid of changing that system because as long as they have the job it works for them. It's whistling past the graveyard. Lose the job, get sick, and you'll see just how quickly people change their minds.

Agreed. In addition, every forum discussion (argument) I've viewed the opposition to any form of universal health care is by posters covered under employer health care policies. Few realize most plans are capped and for other than government, union and senior management employees the cap would not financially get them through a disaster level medical problem.

What I fear out of all this reform is that it won't go far enough, that it will be some piecemeal plan tacked together by legislators who are too chickenshit to truly address the myriad problems we face. More and more, I'm leaning toward a single-payer plan open to everyone. If my taxes increase to pay for it, then okay. As Michael pointed out, peace of mind would be worth every penny.

[Americano]

The problem with this type of approach is that the paperwork needed to administer that 'buy-in' plan - and the appeal process needed to deal with such issues creates a huge bureaucracy that is almost as big a drain on resources as the insurance companies are.

That's one of the main reasons Canada maintains a 'one-size-fits-all' program. There are no options and it applies to everyone all the time. No bureaucracy to handle the paperwork if there isn't any paperwork.

People can and do purchase 'supplemental' health insurance for travelling, private hospital rooms, extended care and/or loss of income due to sick/injury. But all your basic healthcare coverage is completely covered.

As for US private employer-provided healthcare, it has been suggested that all of the wage increases you might have gotten over the last twenty years has been sucked up by the astronomical rising costs of the employer provided healthcare insurance that you are so happy with. That insurance forms part of your paycheck and the reason employers like it is because it tends to 'lock you in' with them and not seek employment elsewhere. That's their benefit, not yours.

It's also a simple employer expense without cumbersome SS, medicare and income tax match/withholding. Big insurance drops a bomb on any legislative effort to call it what it is, employee income that should be subject to taxation.

When I was a corporate officer all senior management had medical plans far more extensive than the workers, but we paid for the privilege under a critical employee P&P to avoid legal challenges by employee level lawyers seeking deep pockets.