Apparently Obama has upped the ante and the actual bill will be closer to $450B. That still doesn't substantially affect my thoughts below, but just to be accurate....
President Obama, hours from now, will outline his new 'stimulus' plan. The plan, which has already been released as a draft, will amount to a mini-ARRA package (you remember, the first $800B stimulus). The new plan is roughly half payroll tax cuts and unemployment benefits, and half new spending.
This new 'jobs' plan comes mere weeks after Obama, though motivated to do so politically due to the persistence of Republicans, passed a huge 2 Trillion-dollar+ spending cut package just to increase the Federal debt ceiling to account for past spending! So this got me thinking...wait a minute. So we want to decrease spending and then a few weeks later we want to increase spending??? = CONFUSING to the average American
Now, it's difficult to say how much that passed spending cut will amount to year-by-year, but some fellow econ geeks (like these guys) suggest that nearly $200B will be cut by 2013 year-end due to the debt ceiling bill. Meanwhile, Obama is going to propose to increase spending by $300B. You can do the math folks. But, in essence, the $300B, according to some economists (according to Krugman a while back, a $300B stimulus would decrease unemployment by about 1%) the effect on GDP and employment would be negligible. So, you can imagine that a NET $100B will be worthless and a complete waste of time. This is beside the fact that, as I've posted before, spending does not mean employment! Fiscal stimulus on paper is a lot different than fiscal stimulus in practice. Just because the money is spent doesn't mean it will continue to flow through the economy. Our financial system is a bit stronger than 2009, but it's still not up to par. And spending money doesn't happen over night. Often it has to flow through State governments and bureaucracies and then private bureaucracies and pass X number of 'conditions' before the shovel can actually hit the dirt. It's just not an effective economic tool in general.
Obama, as we have all learned, is at his lowest point ever, and what that means is that he is DESPERATE. He will do anything to try to get himself out of this hole that he, with plenty of help from Republicans, has dug himself. He likely, being a good ole' fashion Keynesian, would have preferred a much bigger stimulus, but I'm sure his advisers have suggested that would be political suicide.
All this does not bode well for the man, or his Presidency. Some of this is his own fault: his failure to lead the health debate until it got too far out of hand, his failure to communicate a singular and common message to the people, his lack of prioritization, etc. But much of this too is the fault of our political system in general. Our dichotomy-politics breeds an us versus them environment. It's an environment where some extreme Republicans resort to hate speech and chants of 'socialism', and extreme Democrats resort to similar hate speech (think Andre Carson) and chants of 'idiocy'. It all means that Obama's Presidency is DEAD at this point, and that, barring some real change and hope, our political system itself may not be far behind.