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Photograph of Governor Paterson at the White House yesterday by Charles Dharapak/AP
Paterson also announced the creation of a website to track how the state spends the money: economicrecovery.ny.gov, which has a greeting letter from Paterson pointing out, "We still have to address a $13 billion deficit next year and a multi-year deficit of over $48 billion." However, Assemblyman Richard Brodsky (D-Westchester) argues state agencies have too much power in deciding which projects go forward while localities don't, "These secretive, Soviet-style bureaucracies are emerging as the decision makers that affect communities across the state. We're trying to reform them, but in the interim, you have people unknown to the general public making decisions as to what communities should benefit and what communities should not."
About $4 billion of NY State stimulus money is for highway, bridge, and mass transit projects. And Senators Charles Schumer and Kirsten Gillibrand sent a letter to President Obama welcoming any refused stimulus money, "New York receives 78 cents from the federal government for every dollar we send to Washington. If other states are willingly refusing federal support in this time of economic crisis, New York should benefit given our 'donor state' status."
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And after the bridges are built--granted which may take 25 years at the pace unionized, state workers go--what happens then?
Is productivity increased because a road is repaired or road built that those workers will then have 1000s of projects to work on after they repair the roads---which is what New York State should have been doing in the first place?
then its somebody else's problem
And after the bridges are built--granted which may take 25 years at the pace unionized, state workers go--what happens then?
They then start on a ten year repair project of the same bridge. The circle of life is complete.
Obama has always said the main goal of the stimulus is to 'save or create' 3 million jobs, not to increase productivity. As I understand the thinking behind it (which is certainly open to criticism), the stimulus spending is meant to maintain the economy until the private sector gets moving again. While productivity is an important economic indicator, it doesn't seem relevant to focus on it at this point in time. But I'm no economist, so who knows.
There's also a debate as to whether productivity has been artificially inflated over the past 5 years or so. For example: http://www.businessweek.com/magazine/content/07_25/b4039001.htm
How they will quantify jobs they saved seemed a bit disingenuous to me, first off.
But if you're going to call it a stimulus instead of a bailout/spending package, it should be focused on increasing productivity.
Granted, I'm an Austrian who firmly believes that increased production comes from savings.
I feel like you may be of the Keynesian school as you claim that productive jobs are of less importance and that saving or creating jobs is more important. I disagree with JM Keynes and his banknote bottle jobs theory.
http://books.google.com/books?id=LlwH4tXQWYUC&pg=PA129&dq=%22fill+old+bottles+with+banknotes%22&num=50
Yeah the whole "jobs saved or created" thing is clearly a smokescreen to obfuscate the effects of the package. I don't think you can quantify 'jobs saved' in any way.
The 'stimulus vs. spending' thing seems to be a distraction. What it's called doesn't really matter. It's always been presented as a package to save/create jobs. If you don't think the package will save/create jobs, that is a legitimate argument, but an argument that is only concerned with nomenclature is a waste of time.
Again, I have no expertise in economic matters and I don't consciously adhere to a certain economic school. In broad terms, it's fair to say that I am not a free-marketer. The economic reasoning that's been presented to support the package makes sense to me. However I don't think job creation solely for job creation's sake is worthwhile (that appears to be the theory you're attacking).
In any case, I'm not claiming that anything is more or less important.. I am just pointing out that you keep mentioning productivity, but that is not what the package is concerned about. That may be an error in judgment by Obama and Geithner, et al, but I don't feel qualified to make that determination.
Agreed. It's just more spending on borrowed money from central Chinese bankers.
What part of the reasoning makes sense to you? On its surface, it sounds palatable to say we're going to spend a lot now to create jobs and when everyone's working tax revenues go up and we can get back to our big government, entitlement system ways.
But the major fallacy is that government cannot create jobs without destroying private sector jobs.
You have to remember that the government cannot give something to you without taking it away first. The government's broke. It's all on a Chinese, Japanese, and Sinagpore credit card.
I just want government to get out of the way so we can create productive, long term jobs.
A genuine question.. how will 'productive, long term' jobs be created? And what is the government doing that is 'blocking' that in your mind? The way your post is worded, you make it sound like if there was no stimulus bill, we'd all be just fine.
The debt is a serious problem, but the short-term problems appear to be more serious.
1. The money the federal government is spending steals credit away from the private sector. It goes back to my line," the government cannot give something to you without taking it away first."
To break it down, you must first understand how we monetize debt. We obviously don't have the money to pay for any of these bailouts or TARPs or entitlement plans. How do we get that money? We instruct the Federal Reserve to float T-bills and this is where the stealing begins: Chinese central bankers that may otherwise allocate capital to corporate bonds give it to Ben Bernanke and Obama/Congress for their bill instead.
And the best part? We all pay interest on that principal---principal that we would never have access to as say a small business owner.
2. The long term problem of defaulting, insolvency, bond rating slashing is MUCH worse than unemployment, some people getting their entitlements (Medicaid, Medicare) cut, and other symptoms we're currently facing.
If we continue our massive spending, we run the risk of destroying our entire currency. Right now we're okay as other nations have raced to devalue their currencies. But if we owe China $10 trillion in another year or so and they continue to slow down and want to do another stimulus for their own nation they may need to cash in. If that's the case, we're fucked. We can't pay for it with savings. Interest rates will skyrocket and then soup kitchens will become reality.
I'd rather bite the bullet now. Let's do nothing, let bad businesses purge, let housing values fall, and let headline unemployment spike to the teens and be done with it. Sure some people will go hungry, and some will go homeless. But if we try to keep saving everyone and everything soon enough we'll all be hungry and homeless.
You assume that those bankers would otherwise allocate capital to (US) corporate bonds. That may be a safe assumption, I don't know, but it's still obviously an assumption. It's not clear to me that it's a zero-sum game.
The long-term problem is potentially much worse, but that doesn't change the fact that there is a short-term problem. Also from my understanding there is no way for China to "cash in", as this would also destroy their economy.
From where I'm sitting you're making an underpants gnome argument. I just don't see how doing nothing will change the financial climate right now. That's where I'm stuck. The stimulus isn't a perfect solution, but imo it is better than nothing.
We've done just fine with taxes and regulation in the past. That doesn't mean there isn't room for reform, but I simply don't see the need for the radical changes you propose.
My answer was long, but had an important point I wanted to get across. But simply put, here is your answer: Productive, long term jobs will be created when we remove onerous taxes and legislation on all businesses, provide a stable currency which will provide stable markets for commercial paper and corporate bonds, and stop excessive government spending which requires us to monetize debt.
Lastly, abolish the Fed so pyramiding debt stops, and businesses that become "too big to fail" that, of course, fail doesn't bring down innocent parties in its wake.
Sarcasm. It doesn't "stimulate" anything.
Aside from the obvious, like not having a bridge collapse, you would have in general more efficient use of transportation. Truck transport of goods, for example, will flow a little faster -saving time and money that would have been spend on fuel. The savings on each individual trip might not be much but the savings become meaningful when aggregated over a huge number of trips.
The same thing is true for mass transit. If a train car breaks down ten percent less often the MTA will (theoretically, this is the MTA) save huge amounts of money in avoided repairs over the long term.
Wouldn't the 2nd Ave subway be a perfect stimulus project?
Of course, but it isn't going to gain any upstate votes.
Phase I has already been budgeted and is already in construction phase. Phases II+ are still in engineering, so they are not "shovel ready" and therefore do not qualify as stimulus projects.
I don't see how the 2nd Ave. subway is going to "stimulate" the economy. The best stimulus projects are ones the encourage additional investment or economic activity by others. Thats why people keep bringing up the interstate highway spending in the 1950s. The government built the highways but the developers built houses in the suburbs and people bought more cars. Business could move goods quicker and cheaper. That said, what's the subway going to do? Spur more condo development on the UES? The place is already crowded yet people manage to get to work. I think it would have been better to build subways in parts of Queens where people either take a bus to the train or drive to Manhattan.
I didn't argue that the 2nd Ave Subway would (or would not) be stimulative, but as I understand, the main point of the package is to keep people employed. Keeping them employed would keep them spending, and that spending could result in additional investment or economic activity by others (to compete for those spending dollars). Again, I'm no economist and I don't claim that this will actually occur. That's just how it's been explained to me.
I should have replied to TimSPC as to whether the subway is stimulative or not or to what degree. I would say the subway is money better spent than resodding the National Mall or building an Ultimate Frisbie course in Austin, Texas (proposed - not actually in the bill). But Bottomless Chips asks a valid question as to what happens when the projects are completed. Again, the subway is not the bridge to nowhere but will it spur more economic activity?
Unfortunately, I don't have the answer to your question.
And my understanding is that no one does, which is what makes this such a fearful and uncertain time. But, again as I understand, this is routine for economic slowdowns. When you're in the middle, you don't know what's going to pull you out. As an example, who knew in the early 90s that the internet would come along and have the impact that it did?
Theoretically, it would spur economic activity after completion by allowing for better access to commerce on the East Side.
The East Side is primarily residential with the exception of museums (mostly on Fifth) and medical (centered on York). Not to be overly argumentative but the subway isn't going to do much to spur further commercial activity. And it's almost always spun as a way to alleviate crowding on the 4-5-6 lines. I could see if someone wanted to claim that the crowded trains discouraged development but I don't see that that has happened.
The 2nd Ave subway line would extend the nation's largest mass transit system and decrease the need for Middle Eastern oil. That's a plus for the enviroment, regional development, national security and our balance of payments (less money sent abroad for imported oil). The multiplier effect of these construction jobs will benefit the entire metro area.
Hmmm. So according to Gothamist New York receives 28 billion while states like NC received only 6 billion? What gives? NC's population is roughly 60% that of NY so it's obviously not population based.
I believe it's a combination of having two NY senators and the fact that NY State has traditionally contributed a lot to the nation's economy.
This data wasn't based on the final bill, but gives some indication of the breakdowns (note the total isn't $787 billion because certain parts of the bill could not be included in the analysis.. read the methodology for more info).
http://www.americanprogress.org/issues/2009/01/house_stimulus_overview.html
There is a link at the bottom to an excel spreadsheet. On a %GSP (gross state product) basis, NC is getting slightly more than NY, but again I emphasize that this analysis was not based on the final bill, nor do I claim that this is the right or wrong way to compare stimulus payouts by state.
Thanks, Politburo.