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In Case You Missed It: “Stimulus to date? A bailout for states”
09.11.09

In Case You Missed It: “Stimulus to date? A bailout for states”

“It was sold as a job-creation program, and the jobs have yet to arrive.”
 
 
“Stimulus to date? A bailout for states”
Editorial, Nashua Telegraph
Friday, September 11, 2009
 
The American Recovery and Reinvestment Act is only 6 months old, so it's too soon to write the final evaluation on a program designed to pump nearly a trillion dollars into the U.S. economy over two years.

But it's becoming fairly obvious that the program is not going to create the number of brand-new, full-time, benefit-paying jobs predicted by the Obama administration, which set the total for New Hampshire at 16,000.

As reported in The Sunday Telegraph of Sept. 6, New Hampshire can expect to collect somewhere between $500 million and $1 billion from the stimulus program when all is said and done.

About $363 million of that amount has already been awarded in state contracts or in direct federal grants to cities, towns and private contractors in New Hampshire. That could theoretically amount to more than half of what the state will get from the program.

With such a significant portion of the state's anticipated stimulus money already spent or committed, it's disappointing that so few new jobs have been created.

The federal government estimate of 16,000 includes indirect jobs, such as the diner waitress who has to be hired because of all the new construction workers hired for a nearby road project. So even if we cut the federal estimate in half – bringing it down to 8,000 – New Hampshire still has a long way to go.

So far only 796 jobs have been linked to the stimulus program by the state's own accounting, and fewer than 100 are newly created positions.

The rest are state jobs that would have been lost to layoffs if not for $34 million in stimulus funding that went into the state treasury.

And when it comes to approved projects, most are highway or bridge projects that were already on the state's 10-year highway plan but not funded.

It's no surprise that the most immediate beneficiaries of the stimulus program are state governments, since there is a direct pipeline from Washington into state treasuries via Medicare reimbursements and other shared liabilities. Change the formulas and more money flows in.

The same goes for the billions invested in extending unemployment benefits and enhancing other programs designed to help the unemployed. Change a few criteria here, a formula there, and money starts to flow without any new bureaucracy or application and grant process.

The more complicated projects, such as commuter rail and water quality programs, will create more jobs but take longer to work their way through the application process.

Nonetheless, it's becoming clear that the program so far has largely been a fiscal life preserver to financially strapped states and a bonanza for the asphalt and paving industry.

The distribution of the remaining funds in the year ahead will no doubt boost the job figures, but nowhere near initial estimates.

Does that make the program a failure? A monumental waste of $1 trillion that will do little more than fuel inflation and increase the deficit? Time will tell.

The economy will eventually recover. Obama supporters will say the stimulus spending contributed to that recovery and prevented the recession from turning into another global Great Depression. Opponents will say the recovery would have occurred anyway, and there will be no scientific proof of either assertion.

One things is certain. Without the infusion of federal dollars, some states would have faced massive layoffs and disruption in services, even bankruptcy. California, despite the federal aid, is still on the precipice.

Millions of Americans benefited from the extension of unemployment insurance and other benefits that eased the impact of joblessness. And the infrastructure improvements to roads, bridges, airports and mass transit will serve generations to come.

But the American Recovery and Reinvestment Act was never sold as a state rescue, road-paving program, or safety net for the unemployed. It was sold as a job-creation program, and the jobs have yet to arrive.
 
Link to editorial
 
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