Wednesday, July 08, 2009

Stimulus slow to create jobs because of changes made by GOP Senators(!)

Remember back when Democrats had to just about sell out the barn to get three Republican stimulus votes?

The bill was trimmed substantially, from over $900 billion to its final pricetag of $787 billion.

Still a lot of money but even then a lot of economists predicted it would not be enough.

Well, if it isn't then the problem is not even so much the amount of the money as the way what was left was structured. The stated purpose of the bill was to create jobs but what was left does not do that.

Start with the fact that 42% of the stimulus is in the form of tax cuts. At best, tax cuts might be spent to create jobs but in the present environment the chances are than anyone who can afford to save their tax cut money is probably doing exactly that; spending it on job creation is just too risky right now. It would have been far better for the Government to spend the money up front than handing it out in tax cuts.

Most of the rest of it is going to state and local governments which have been using it to shore up their budget holes. That might prevent more layoffs of state workers but again, this isn't really creating a lot of jobs.

What is missing is the direct spending by the Government to hire new workers. Remember all the 'shovel ready projects?' For example, in order to get her support Senator Susan Collins of Maine made them take out every dime that had been in the stimulus for school construction. It's not like there isn't a need for school construction, there is. And right now there are plenty of Americans ready to do it. But in order to garner the votes of a handful of Republicans the portions of the bill most directly related to job creation were removed.

Now, I understand that this is the way Govenrment works (even more so given that at the time the administration had to have at least two Republican Senators or they couldn't have passed any kind of a bill.) However for Republicans to complain about the slow pace of job creation when it was Republicans who in effect structured it that way is at best hypocrisy.


sandyh said...

If we are not going to be bold in attacking problems, the same half measures employed will only come back to bite us harder.

Krugman predicted this would happen just like he predicted the economic meltdown more than a year before it happened. Perhaps it's time to listen to him?

Eli Blake said...

You're right,

I was thinking today that with the benefit of hindsight it might have been better to slam through the stimulus in its original form. If the Republicans chose to filibuster and it didn't go throught then they'd get blamed for that, and then it could be put through again (maybe bigger, because more would be needed by then.) But my guess is that when the deepening of the recession was staring them in the face, they'd blink.

shrimplate said...

"A chicken in every pot and a car in every back yard, to boot."

1928 Republican campaign slogan. Pride before the fall.