When i saw that report a day or so ago i just shook my head in an act of depressed bemusement.

I'm not even close to the level of financial knowledge that exists at the Agonist, but all i can see is Obama attempting to fix the problem with the same behavior that created the problem. Easy money. Borrow now to pay later...and not even borrowing for something of long term value.

But the question that keeps popping up in my mind is: where is all this money going to come from. I understand the counter cyclical idea, but a lot of that idea is based on getting your finances in order when times are good, no?

This looks like a whole heap of new debt to me, and not much more since it will just get funneled back to the banks in an attempt to pay on individual debts. And with GDP being squarely on the back of consumer spending, are we not running a serious risk of seeing debt as a percent of GDP rising to unsustainable rates?

Considering that we keep borrowing in hopes that consumer spending can be reignited. But i'm not sure that's likely to happen on Main Street. People are scared, professionals are losing their jobs, the word on the street is to tighten that belt.

I have a very bad feeling that we're all (excepting our leaders) about to find out that the "new economy" is a house of cards dependent on the one thing that people can no longer afford to do, or now see the frivolity of doing.

We've been fattened at the trough, i worry that it's time for the slaughter...

Deficits still don't matter to the owners and operators of our Ownership Society, nor to their government (a wholly owned subsidiary of Wall Street).

They pat one another on one another's backs in Washington, and tell one another that they will toss freshly printed money at the problem until it responds, and then print just a bit more to inflate the hangover away. The debt afterward will succumb to funny money. The rest of the world loses, but not America.

The cure for way too many Bloody Mary's, by God, is some more Bloody Mary's!

Everyone's been reassured by everyone else that America will still be special when the smoke clears.

The only people who will be OK, or special a year from now will be the Owners of our Ownership Society, and their government (a wholly owned subsidiary of Wall Street).

If Hank Paulson has not yet smiled upon you, and does not soon smile upon you -- it's Shit Creek from here on out!

"Any manifest error on the part of an enemy should make us suspect some stratagem."
~ Niccoló Machiavelli

Is Obama relying too much on tax cuts?

Krugman's short answer: Like Barney Frank, I’m feeling a bit of post-partisan depression.

Looks like we're being sold down the river again by the feckless (or complicit?) Dems.

UPDATE: Dean Baker: Pssst, the Economy Is Collapsing, Don't Tell Congress

The latest mutterings from Congress, especially the Republican leadership, indicate that they still don't have a clue about the seriousness of the economic downturn we are facing. They are saying that they can't have a stimulus package ready for when President Obama takes office in two weeks, and that a package probably won't be ready until well into February.
This delay is inexcusable. Remember when the Wall Street boys needed their TARP bailout in the fall? President Bush and his crew, together with the Democratic congressional leadership, with a huge chorus of media cheerleaders, all told us that the economy would collapse without immediate action. That is almost true now in the case of stimulus.

Funny how when the GOP wants some idiotic thing done immediately, the Dems fold. But when something really needs to happen when they are in charge, they dither. What a bunch of worthless wimps.

he is FOR stimulus, he just does not want it done through tax cuts. The economic dangers are real and he knows it, but the targeted stimulus he speaks of does not then go about messing with the tax code. I find the tax cut beyond what was promised in the campaign (because there was a tax cut on the table all of last year) is just unnecessary caving.

Be that what it may. As far as where the money comes from it comes from this. The US is currently a $14.5 trillion economy. Returning to real GDP growth of 3% plus inflation of 2.5% provides a total nominal growth of 5.5% or $800 billion. This sum adds on each year the economy grows and that is where the money comes from, the future. It is a truism that so long as deficits are below the pace of growth, it can go on indefinites. This year though it is definitely eating into the future.

Krugman makes sense to me.

If the government gives the money to the people, a lot of it will go to China or Saudi Arabia as people splurge on cheap crap and driving.

If the government uses the money to build infrastructure, we will have tangible assets which we can use for years to come. We will also have employed many workers, giving them experience and skills.

The latter seems to trump the former by a lot. It is the difference between using your money to go out to eat versus using it to buy a stove and cooking lessons. Both will get you fed now, but the latter will feed you a lot longer.

"This really does look like a plan that falls well short of what advocates of strong stimulus were hoping for — and it seems as if that was done in order to win Republican votes. Yet even if the plan gets the hoped-for 80 votes in the Senate, which seems doubtful, responsibility for the plan's perceived failure, if it's spun that way, will be placed on Democrats.

I see the following scenario: a weak stimulus plan, perhaps even weaker than what we're talking about now, is crafted to win those extra GOP votes. The plan limits the rise in unemployment, but things are still pretty bad, with the rate peaking at something like 9 percent and coming down only slowly. And then Mitch McConnell says "See, government spending doesn't work."

blog entry

This is the conclusion. Krugman runs through the numbers in the blog.