Republicans opposed the president’s stimulus plan en masse, arguing it would do little to stem unemployment and revive the economy, while worsening the flood of red ink gushing from the federal coffers. Little did they know how correct they would be.
The New York Times reports:
Nearly three months after President Obama approved a $787 billion economic stimulus package, intended to create or save jobs, the federal government has paid out less than 6 percent of the money, largely in the form of social service payments to states. Although administration officials say the program is right on schedule, they have actually spent relatively little so far.
[. . .]
The intent of the stimulus program was to pump money into the economy quickly, and many members of Congress said at the time of its passage that speed was of the essence. But the huge program has been a challenge to administer for both a new administration and for states and local governments grappling with their own fiscal problems.
Some states and cities are beginning to complain that the money has yet to reach them. Others have been slow to get their paperwork to Washington; Virginia has yet to send the Transportation Department its list of road projects. At the same time, some economists have questioned the administration’s claims that the bill has saved or created 150,000 jobs.
The stimulus isn’t very stimulating because so little has been spent. Only $11 million has gone out the door on highway projects. It is no wonder that a top Democrat is now acknowledging that the stimulus was “oversold.” (“A spokesman for Minnesota Rep. James Oberstar, who leads the House Transportation and Infrastructure Committee, says the White House shouldn’t have billed road money as the signature component of the stimulus, or as a surefire boost to needy communities.”) But there was plenty of money, $800,000 to be exact, to pay for an addition to the airport in Rep. John Murtha’s home town.
But the main purpose of the stimulus — job creation — is unfulfilled. Indeed, the economy is hemorrhaging jobs. The unemployment rate is now 8.9% and is expect to hit double digits with no prospect of job growth until 2010. That’s a far cry from what the administration was peddling in January, when Christina Romer released a report claiming that the stimulus was needed to keep unemployment at or below 8%.
A Republican staffer put it this way:
In other words: they were wrong. … It will be interesting to see how the new report “saves or creates” the same amount (3.5 to 4 million) of jobs by the end of 2010 that they promised at the bill signing-even though the country has lost more than 1 million jobs since then, the unemployment rate is well above the assumptions used for the earlier projection, and the fact that Dr. Romer, Dr. Summers and others believe that we’ll continue to have job LOSSES through the end of the year.
And even the MSM recognizes that the promised jobs cannot be verified. ABC News observed on Monday:
The White House Council of Economic Advisers issued a report today predicting that the stimulus package will save or create 1.5 million jobs by the end of this year. That’s in line with previous White House estimates. But there’s a big caveat: Because there is no uniform, reliable reporting formula for states and agencies to use to calculate real jobs saved and created, there is no way to fact-check the projections. Rather than measuring actual jobs created, the CEA estimate is based on a formula widely used by economists: that a 1 percent increase in GDP equates to approximately 1 million jobs. The council also makes the assumption that GDP will grow, due to an increase in government purchases, and tax decreases that have only just taken effect. It is, the report concedes, “an imperfect” measurement. … The administration continues to defend its initial assessment that the Recovery Act will ultimately create or save 3.5 million jobs. But the new report includes the caveat that the bulk of that increase will be seen at the end of 2010.
So, the bottom line: we have spent a trillion dollars (including interest) largely on nothing. We aren’t getting jobs — at least none that we can verify. We aren’t getting infrastructure. But we did get a mound of debt.
While lacking any significant economic punch, the stimulus may, however, have a substantial political impact. It was in large part the motivation for the tea party protests. It has allowed Republicans to differentiate themselves from the Obama spending plans. And it has heightened the concern of so-called Blue Dog Democrats who may now be nervous about running up even more debt which would be generated by the remainder of the Obama agenda.
The stimulus was a missed opportunity — a chance to finance needed defense spending, provide badly needed infrastructure, and provide tax assistance to employers to maintain and increase hiring. But Republicans may now see it as a juicy political opening. They can rightly claim they opposed the boondoggle spending, which has done nothing but increase our fiscal woes. And in that respect it may be a critical component in Republicans’ political comeback. In sum, sometimes saying “no” is exactly the right thing to do.