Regarding "cost" versus "investment" - the bank bailout plan got a lot of negative publicity because people saw that it would "cost" $750 billion. However, I believe all the spending that was permitted by that act was loans and equity investments by the Treasury. Of course, given that this money is being given precisely to companies that are in danger of collapse (including large amounts to automakers and others that weren't explicitly considered in the original vote on the bill), there was a good chance that some amount of this money would be lent out and not paid back, or would be spent on equity in a company whose stock price collapses to $0. However, I never heard any mention of what interest rate this money was being lent at (is it the standard Fed rate, which is currently basically at 0%? or is it a higher rate because this is clearly a subprime loan?). I've heard that the government made some profit on various loans that have been paid back, but I haven't heard anyone discuss how much the government may make or lose on the stock price of GM and Chrysler.
Anyway, that bill was described with "costs", even though it literally was entirely spent on traditional financial "investments" of loans and stock.
The stimulus package is a better candidate than the healthcare bill to be presented as "investment", because it is meant to keep people employed (which should cut costs to the government on unemployment rolls and increase revenues directly with the income taxes all those people pay) which will make those people spend money and stimulate many other portions of the economy, which will then generate tax revenues for the government. I don't remember hearing any discussion of a CBO score of that bill - perhaps they didn't bother running it? I don't really know.
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timeasmymeasure
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Date: 2009-11-19 09:16 am (UTC)Anyway, that bill was described with "costs", even though it literally was entirely spent on traditional financial "investments" of loans and stock.
The stimulus package is a better candidate than the healthcare bill to be presented as "investment", because it is meant to keep people employed (which should cut costs to the government on unemployment rolls and increase revenues directly with the income taxes all those people pay) which will make those people spend money and stimulate many other portions of the economy, which will then generate tax revenues for the government. I don't remember hearing any discussion of a CBO score of that bill - perhaps they didn't bother running it? I don't really know.