Priorities

This is my first diary so help is welcome and any comments on how to do this thing right is very much appreciated.

This topic might have already been discussed, in fact I am sure it has. But reading these numbers coupled with NYCEVE's diary this morning got me so upset that I felt I had to say something on the state of our priorities.

In NYCEVE's diary she talks about a baseball manager in the minors who has a child with a heart defect. The bill is huge and the baseball manager stated that he would rathar loose his house than his child.. This is a sad story no doubt, and one that is being told by thousands of Americans every day.

Now today our wonderful fed chairman said that we are facing a recession and money needs to be juiced into the economy. And of course that money is going to come from us, the consumer.

The cost of this economic bailout, though, is very intersting. This from the article:

Former Treasury Secretary Larry Summers told lawmakers at a hearing of the Joint Economic Committee on Tuesday that Congress should immediately consider a stimulus package of $50 billion to $75 billion through a combination of tax cuts and increased spending on unemployment benefits and other programs. He also advocated that another $50 billion to $75 billion be set aside in case economic conditions weaken further.

Now SCHIP under bill HR 976 would have cost the taxpayers 60 billion over 5 years, or 12 billion per year. Which is more expensive, the bailout or SCHIP? Would Charlie Montoyo, the baseball manager, have to worry about selling his house so he could pay for his child's insurance bills if SCHIP would have passed?  Would the nation had needed this "juice" to the economy had we not been forced to sell our houses, cars, land, credit rating etc... to pay for our children's medical bills that private-for-profit insurance would not cover or was too expensive to purchase?  All hypotheticals of course.

•  Nice First Diary

  please post a tip jar.

  by BlueGenes on Thu Jan 17, 2008 at 09:26:59 AM PDT

  •  How?

    by meatwad420 on Thu Jan 17, 2008 at 09:29:54 AM PDT

    •  After posting the Diary

      its customary to post the very first comment. Include the words 'tip jar' in the subject line. Than readers who like your stuff can rec the tipjar comment as a way of giving positive feedback. If they really, really like it, then they can recommend the diary as well.

      by BlueGenes on Thu Jan 17, 2008 at 09:54:44 AM PDT

      •  Thank you

        I thought maybe the recommend button was the tip jar and you had to press it for people to see it.

        Baby steps to the door.

        by meatwad420 on Thu Jan 17, 2008 at 10:49:34 AM PDT

•  I Had No Idea

  Are they really thinking about pumping that much green paper, I mean money, into the economy?

  Before I came here to DK, I had a teeny clue about the Fed, lowering interest rates, recessions etc. Now after reading Bonddad et al., my hair stands on end at the thought of that smoking printing press, and with children sick who could be treated instead? Yeeps!

  Here's what one writer was saying three years ago and I'm going to look for what they're saying now by comparison.

  by JG in MD on Thu Jan 17, 2008 at 09:35:52 AM PDT

•  Not Fiat Money

  It looks as though I'm starting an econ class here, hoping a teacher will show up to explain a few things to us.

  As the source of the "juice" I was talking about fiat money from the Fed, defined thusly.

  The Fed has 2 main sources of power: 1) the power to "diddle with rates" both by resetting the actual Fed Funds target or by merely talking about it and 2) the "magic checkbook" whereby the Fed can create money out of nowhere and buy bonds on the open market. The power to create money out of nowhere (fiat money) is impressive.

  It is imperative that the Fed buy debt on the open market and not directly from the Treasury Department. This idea of "open market" is extremely important. The Fed can open up its checkbook (the magic one with the near infinite overdraft protection) and inject money into the economy by buying government notes and bonds. But, it must do so on the open market. Congress' sovereignty over expenditure is maintained by forcing the Fed to buy from private holders of government debt.

  Does this mean the Fed will buy government debt, give us the money they pay for it with, and then collect on the IOU a second time later?

  by JG in MD on Thu Jan 17, 2008 at 10:02:35 AM PDT

  •  No, Wait . . .

    The Fed buys a note on the "open market" by law. That means they give the actual money (what a quaint notion, actual money) to the Chinese, or the Rockefeller Family, or whoever owns the note. Then the money represented by the note is owed to the Federal Reserve.

    But the Federal Reserve isn't us.

    How do we follow the money here? I'm not sure which is the debt and which is the cash and who has what.

    Haaalp!

    by JG in MD on Thu Jan 17, 2008 at 10:09:30 AM PDT

•  Okay, Here's the Short Version

  Never mind the Fed. What about the deficit and Paygo?

  Leaders in both parties also will have to deal with the deficit hawks in each. The idea behind the stimulus effort is to pump money into the economy, not to pump some in and suction out the same amount elsewhere in order to not add to the budget deficit.

  Many Democrats have generally promised to live by a "pay as you go" rule against deficit-financed legislation. Some of them are still steaming over a decision to waive that rule last month when passing a one-year, $50 billion "fix" of the alternative minimum tax, and they're already resisting the idea of waiving it again for any stimulus package.

  by JG in MD on Thu Jan 17, 2008 at 10:14:15 AM PDT

  •  The democratic plan

    as I have read, seems to be to pump money into the survival-wage class with higher unemployment payments and extending the term limit for welfare and food stamps. But this is really just putting a band-aid over the severed limb. SCHIP would have helped alot of people, even my co-worker is losing his child's benefits this year.

    I have no problems with spending this money in this fashion, but we will have to raise taxes. And raising taxes on the ones you are giving a benefit too is assbackwards.

    by meatwad420 on Thu Jan 17, 2008 at 10:48:11 AM PDT