Explain this to me

[Denny Crane]

^^^ Note: if they want to pass a separate relief type bill and a separate infrastructure spending bill, I would like to see it done that way.

The economic stimulus bill is massive deficit spending, it should be 100% things to immediately help the economy. Like put a floor under housing prices, pay companies 2x a year's salary to hire a person, and that kind of thing.

 

[barfo]

pay companies 2x a year's salary to hire a person, and that kind of thing.

How does that work? I haven't heard that idea before. Why 2x, and what keeps the company from firing the employee once the federal money runs out? And why is this a better stimulus than hiring people to build roads, which you think shouldn't be in the stimulus package?

barfo

 

[Denny Crane]

How does that work? I haven't heard that idea before. Why 2x, and what keeps the company from firing the employee once the federal money runs out? And why is this a better stimulus than hiring people to build roads, which you think shouldn't be in the stimulus package?

barfo

Salary is only part of the actual cost of having an employee. For white collar jobs, you have to pay for office space, phone bills, electricity, supplies, and other things to support the employee. For blue collar jobs, you might have to pay for a fleet of trucks, tools, gas, insurance, etc. Plus benefits, like insurance.

Previous stimulus packages have given people from $300 to $1000 in direct payments. This doesn't compare to giving someone in the household a job with a steady paycheck, even for a year. Though for that year, you'd expect the landlord (office space), phone company (phone bills), electric company, suppliers, auto makers (truck fleet), etc., to see more demand for their products and services.

People with paychecks buy things, which would also help the entire economy.

Building roads is a short term project. When the job's done, what do you do with the people hired?

It's also a really expensive way to provide jobs. Something like $200K per employee, of which the employee might see $50K. So 4x salary vs. the 2x I suggest.

$800B is the low end of the stimulus package size proposed. At 2x salary, it would add 8m $50K jobs or 4m $100K jobs to the economy.

Without a whole lot of bureaucracy.

Immediate effect.

 

[barfo]

Previous stimulus packages have given people from $300 to $1000 in direct payments. This doesn't compare to giving someone in the household a job with a steady paycheck, even for a year.

Because the prior stimulus packages gave the money to "everyone". Your plan gives it to a small subset.

Building roads is a short term project. When the job's done, what do you do with the people hired?

We are years behind on basic transportation maintenance projects. There's plenty of work there if the money was there to pay for it. And we'd all benefit from the results. Whereas in your plan the employer gets the direct benefit; society only gets the indirect benefits.

Finally, what makes you think the employers will keep the federally funded employees on after the funding stops?

Without a whole lot of bureaucracy.

I don't see how you are going to do that, without just writing companies a blank check. How do you tell if they used the money to hire someone? How do you tell if they didn't hire someone and turn around and fire someone else?

barfo

 

[Denny Crane]

Because the prior stimulus packages gave the money to "everyone". Your plan gives it to a small subset.



We are years behind on basic transportation maintenance projects. There's plenty of work there if the money was there to pay for it. And we'd all benefit from the results. Whereas in your plan the employer gets the direct benefit; society only gets the indirect benefits.

Finally, what makes you think the employers will keep the federally funded employees on after the funding stops?



I don't see how you are going to do that, without just writing companies a blank check. How do you tell if they used the money to hire someone? How do you tell if they didn't hire someone and turn around and fire someone else?

barfo

Unemployment is at 7.5% nationally, higher in many places. The workforce is about 120M people. 4M jobs is enough to cut unemployment by a LOT.

If people have jobs, they'll spend, and what they spend on creates demand for products from those industries. Thus people with jobs in those industries will need to be kept around.

You can tell if people are hired by the W-2 forms.

 

[AgentDrazenPetrovic]

I didn't get money from the prior stimulus package.

 

[barfo]

Unemployment is at 7.5% nationally, higher in many places. The workforce is about 120M people. 4M jobs is enough to cut unemployment by a LOT.

Sure. Not arguing that 4M new jobs wouldn't be welcome.

If people have jobs, they'll spend, and what they spend on creates demand for products from those industries. Thus people with jobs in those industries will need to be kept around.

Yes. But you can say that about creating jobs in the public sector as well (filling potholes or whatever).

You can tell if people are hired by the W-2 forms.

How, exactly? Let's say I have a company of 100 people. The government gives me money to hire one more. So I hire Joe Bob. But then Peggy Sue gets married and moves to Alaska, so she drops off my payroll. Do I have to pay back the government? Do I have to replace Peggy Sue?

Let's say I have a company of 100,000 people. I lay off 1000 people today. Tomorrow, will the government pay me to hire them all back?
Let's say I am hiring in Oregon, and laying people off at a factory in Nevada. Will the government subsidize the hires in Oregon?

How are you going to monitor this without a bureaucracy?

Let's say I'm in the business of consulting on how to get employee subsidies from the government. Business is booming, cash is rolling in the door, and I'm hiring everyone I can. And the great thing is, the taxpayers are paying all my costs, despite my business being extremely lucrative without the subsidies.

barfo

 

[barfo]

I didn't get money from the prior stimulus package.

That's why I put "everyone" in quotes.

Everyone but you, I meant.

barfo

 

[Denny Crane]

Sure. Not arguing that 4M new jobs wouldn't be welcome.



Yes. But you can say that about creating jobs in the public sector as well (filling potholes or whatever).



How, exactly? Let's say I have a company of 100 people. The government gives me money to hire one more. So I hire Joe Bob. But then Peggy Sue gets married and moves to Alaska, so she drops off my payroll. Do I have to pay back the government? Do I have to replace Peggy Sue?

Let's say I have a company of 100,000 people. I lay off 1000 people today. Tomorrow, will the government pay me to hire them all back?
Let's say I am hiring in Oregon, and laying people off at a factory in Nevada. Will the government subsidize the hires in Oregon?

How are you going to monitor this without a bureaucracy?

Let's say I'm in the business of consulting on how to get employee subsidies from the government. Business is booming, cash is rolling in the door, and I'm hiring everyone I can. And the great thing is, the taxpayers are paying all my costs, despite my business being extremely lucrative without the subsidies.

barfo

None of the so-called stimulus bill will have any effect before the end of 2010. How about something that will be immediate help!

Otherwise my characterization of it is right on - omnibus spending bill that we're borrowing $1T for.

If they want to fill potholes, I'm good with it, but it really should be it's own bill for that purpose and funded by taxpayer dollars.

Even if your business is doing good, a hire is a hire, a job is a job. It gives the workers disposable income and cash flow to put back into the economy. The problem right now is that people don't feel secure in their jobs so they spend less, which creates less demand for goods & services, which actually does cause people to lose their jobs. That's a downward spiral, a negative feedback loop, and it has to be reversed or else.