Stimulus Update: Is It Working?

Three months after President Obama signed the $787 billion stimulus plan into law, the White House is issuing new statements reaffirming its belief that the bill will create or save 3.5 million jobs, Republicans continue attacking it as wasteful pork-barrel spending and communities are fighting over who gets the money.

By Mark Willen

published 11 May 2009

in Features

That, of course, is a trick question. It's still too early to tell. Though every effort is being made to push the money out the door rapidly, that has to be balanced with Obama's pledge to spend it wisely, focusing on projects that will create jobs in the near term and lowering the risk of corruption and waste. The result is a spotty record -- at least in terms of approving projects and handing out funds quickly. There's no hard figure on how much has been spent so far, and not many clues on how well it's been spent.

The Associated Press reports today that on the basis of its own analysis, many of the counties suffering the most from the recession stand to get the least from the stimulus. Pennsylvania's Elk County has a 13.8% jobless rate but is in line for no federal help, while Riley County in Kansas, with a 3.8% jobless rate, is getting $56 million for road work. The reason: The money goes to projects that are ready to start and Elk didn't have any. The Wall Street Journal, meanwhile, reports that many cities are fighting with states over stimulus money, feeling they're not getting a fair share and complaining that when they do, they end up losing state aid that was promised earlier.

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Meanwhile, the big promise of transparency for stimulus spending is not being fulfilled -- and won't be for several months, when it will be much less useful. As The Denver Post laments in an editorial today, the government says its stimulus web site can't have real-time tracking because the states aren't required to file reports on spending until October. By then, it will be too late for many citizen watchdog groups to cite waste and inefficiency to any useful effect.

Today's White House reassurance on job creation follows on the heels of the April jobs report, which showed the loss of another 539,000 jobs, pushing the unemployment rate up to 8.9%, a 25-year high. That report was actually seen in a positive light -- as not as bad as expected -- but it's still pretty bad, and Obama's chief economic adviser Christina Romer, told C-Span that even if the recovery ends by summer, employers will move slowly to hire again, with joblessness rising well into 2010. It's likely to pass 10% by a year from now. And that's if a recovery starts soon. There are some hopeful signs, but they are far from convincing.

If unemployment is still rising next year, look for Democrats in Congress to begin to panic, afraid that voters will push back by defeating a lot of incumbents, especially in the House, returning to the cyclical norm that the party controlling the White House loses seats in an off-term election. That will lead -- sooner rather than later -- to a push from Democrats for another stimulus bill. Expect that to ignite lots of fireworks, putting Obama in a tough position.