3. Balanced Growth

5. Very Different Outcomes for Middle Income Families 1994-2000 compared to 2000-2006

6. Easy Credit

8. Credit expansion by the Treasury & Federal Reserve did not solve the problem! After injection of credit, productivity was even higher, output greater and income had stayed the same. Easy credit did not simply delay the day of reckoning, it made it much worse.

9. “Not your Father’s Business Cycle” Dec ‘08

14. How much will consumers and businesses cut back on spending? Some crystal ball gazers say more than 10% 10% X 14.5 trillion (U.S. GDP) = $1.45 trillion

15. How Do You Fill a $1.45 Trillion Hole? Government Spend as Much as Possible Provide Tax Cuts Restore Consumer Confidence

16. Possible Pump Priming Plan Fed Spending $450 b X 1.6 = $765 billion Tax Cuts $250 b X 1.0 = $250 billion Boost Consumer Confidence? = $400 billion Impact of Package $ 1.465 Trillion

17. CBO Scoring of H.R. 7110 2009201020112012201320142015201620172018 09-13 04-182018+ Clean Water Budget Authority 7,500000000000 00 Estimated Outlays 3001,5202,25087049017098493220 5,4303691,701 4.0%20.3%30.0%11.6%6.5%2.3%1.3%0.7%0.4%0.3% 72.4%4.9%22.7% Highway Construction Budget Authority 12,800000000000 00 Estimated Outlays 4,0965,7601,5361,15225600000 12,80000 32.0%45.0%12.0%9.0%2.0%0.0% 100.0%0.0% Unemployment Compensation and Job Training Budget Authority 6,490000000000 00 Estimated Outlays 6,1152501250000000 6,49000 94.2%3.9%1.9%0.0% 100.0%0.0% Temporary Increase in Medicaid Matching Rate Budget Authority 12,1902,47555555555 14,68025 Estimated Outlays 12,1902,47555555555 14,68025-25 100.0%20.3%0.0% 120.4%0.2%-0.2% Temporary Increase in Food Assistance (Food Stampts) Budget Authority 2,6233055000000 2,66300 Estimated Outlays 2,6233055000000 2,66300 100.0%1.1%0.2% 0.0% 101.5%0.0%

18. Capacity?

19. Annual Figures $1.4 trillion is probably the amount needed each 12 months for the next 18 to 24 months $825 billion for the next 3 to 4 years is probably half the amount needed

20. How is the $820 Billion in the House Stimulus Package Divided?

21. How is Likely Senate Package Divided? (Approximately)

22. Macro Economic Impact of Senate Changes? $70 billion shift from domestic spending to taxes: $70 billion x 1.40 = $98 billion $70 billion x 0.49=$35 billion

23. Can We Afford It? Afford It?

26. Questions?