April Public Forum Debate

As the contender in this debate, I intend prove the following: 1. My opponent's confinement of the topic is inaccurate or superfluous. 2. My interpretation of the topic is superior, particularly paying attention to the context of the resolution vs. specific words. 3. That Contention One, by my opponent, according to both his definition and mine, are in fact false. First, I hate to haggle over definitions, but the terms of the debate as you've framed them are overly restrictive. In essence, you are positing that doing something is better than doing nothing, which really leaves little to debate. So let's look at the entire topic: Resolved: That the Economic Stimulus Act of 2008 will successfully mitigate economic slowdowns over the next year. The definition of success you provide is acceptable, however your interpretive focus is misplaced. Successfully, in this context, focuses on the action of mitigating the economic slowdown that is expected in 2008-2009. There are a number of methods of empirically measuring this. The primary method would be to look at the GDP results in successive quarters following the stimulus package's implementation. If we continue to have economic slowdowns, that would be an indicator of potential failure of the package's stimulus impact. This argument however, is incomplete, to be fair. In order for the entire premise to be false, it would need to be proven that, without the stimulus, the slowdown may have been worse (basically the definition of mitigate). The extension of success in this equation, in order to make the debate meaningful, would be to compare the stimulus with both its impact on the slowdown versus its cost. In other words, if we raise our debt spending by $168 billion dollars but mitigate the economic slowdown by only .01% of GDP, was that investment successful versus the cost? If we manage to stop a leak in one place of a levee, but manage to allow water in in two other spots, can we seriously argue that plugging that one leak is successful in mitigating the damage? I would argue that question is inherent in the resolution. Otherwise this debate lacks any substance versus maintaining the status quo. So, to conclude the definition discussion, I propose to extend my opponents success criteria to include an examination of the cost of the package versus the potential results delivered. Now, onto the primary contention that the stimulus package meets all of the goals it was created to achieve. Goal 1, Increasing Consumerism. The only way this argument succeeds is if folks will actually spend the money on items they wouldn't have purchased to begin with. Recent surveys (1) indicate that less than 12% of the rebates sent to consumers will used on unique spending, as opposed to paying off debt, savings, or items that would have been purchased anyways like groceries or gas. My opponent's argument that consumer spending will increase by 26% lacks a source, so I can't review it at this time. The report also assumes that inflationary pressures will remain flat, which may not be the case. Gas prices during the summer alone may eat some of those rebate checks. Goal 2, Increasing Business Spending Given the timing of this stimulus package, I'm afraid my opponent's constraint of realizing the benefit of this spending in terms of real GDP in a year may be misplaced. The vast majority of the package is aimed at goals 1 and 3, and the benefit here likely wouldn't be realized until year 2 or 3 of the economic periods in question. In reality, the economic stimuls of the business spending is marginal at best. "The business tax cuts included in the stimulus package, however, offer less stimulative value. A 2006 paper published by the Federal Reserve Board shows that the economic bang for the buck of "bonus depreciation" for businesses is very modest. Per Zandi: "… of all the tax and spending policies considered, it provides the least amount of stimulus. Such incentives offer a limited boost because many businesses have difficulty quickly adjusting long-planned capital budgets."" Goal 3, Raising home prices I'm not sure raising home prices is a good measure of slowing an economic downturn, since we're watching in real time the correction of the market from the "real estate bubble" to begin with. Second, the stimulus package as it currently exists, likely won't stem the tide of the correction that our economy is currently starting to have (2). "Offering yet another view, Wharton finance professor Richard Marston thinks today's economic problems are quite different from those of 2001, and likely to be more severe and long-lasting -- and resistant to remedies. The key feature of today's downturn is the collapsed housing bubble, which has a broader effect than the burst tech-stock bubble of 2001, he says. While the rebates will lead to more spending, Marston notes, the lack of a long-term tax cut will make the stimulus package less effective than the one in 2001. At the same time, the Fed's interest-rate cuts will not work as well because today's credit problems are caused by lenders' fear of risk rather than a shortage of money to lend. Reducing rates will not necessarily reduce that fear. "I think the banking part of this is more problematical this time than it was in 2001 because we're in the middle of a fixed-income crisis -- because people just don't trust each other," he says, adding: "It's very scary, very scary.... I don't see a quick recovery."" Making home buying more accessible isn't necessarily a good thing if the person can't afford the home to begin with. That's part of the reason we're in the mess we are today. If we further the housing bubble, and by its logic allow people to borrow more against their inflated equity, we are only delaying the inevitable, and making the pending correction in our business cycles even worse. The reality of our current economic issues is due to too much consumerism and debt. This stimulus package does little to remedy that situation. As a result, its ability to mitigate the economic downturn will be largely unrealized. The economy has some lumps to take as part of our natural business cycles. The stimulus package is ill designed to address or minimize those corrections. Why vote CON? 1)Consumerism will increase minimally (10-11%) at best, not enough to make the $147 billion dollars spent worthwhile. 2)Business spending, as expressed in the stimulus package will not have the desired effect in the window proposed (one year). 3)Furthering the housing bubble (of artificially inflated housing prices) will not mitigate this pending economic slowdown. Arguably, stalling it at all may actually make the downturn worse. Citations (1)http://www.creditcards.com... (2)http://knowledge.wharton.upenn.edu... (3)http://www.ombwatch.org...