Champagne's Flat, But Here's to Stimulus

If you think things are bad now, look how bad they would be if Congress didn't pass a $787 billion economic-stimulus bill a year ago. That, essentially, is the message President Barack Obama delivered to Americans today, one year after he signed the American Recovery and Reinvestment Act into law.

Most economists agree with the President's point, but his message isn't winning in the court of public opinion.

The stimulus bill remains unpopular with most Americans, and Republicans are milking this dissatisfaction for all that its worth. A year ago, the economy was shrinking dramatically and hemorrhaging jobs—800,000 in January 2009 alone, Obama noted.

Now, thanks to the stimulus bill, the economy is growing again, and "a second depression is no longer a possibility." Obama said.

This January, the economy lost only 20,000 jobs, although the unemployment rate was 9.7 percent, up two percentage points from a year earlier.

To Republicans, the high unemployment rate shows the stimulus bill was a colossal waste of money.

"Taxpayers aren't getting their money's worth out of the trillion-dollar 'stimulus,' and struggling families and small businesses are rightly asking, 'Where are the jobs?'" House Minority Leader John Boehner said.

The Obama administration's "self-congratulatory 'stimulus' spin" is "hopelessly out of touch with reality," he said.

In his remarks today, the President acknowledged that "millions of Americans are still without jobs. Millions more are struggling to make ends meet. So it doesn't yet feel like much of a recovery."

But the stimulus bill created or saved about 2 million jobs, the President said, an estimate that has been ridiculed because of sloppy reporting by recipients of stimulus dollars, but one that is backed by many independent economists.

The stimulus bill's aid to state and local governments kept thousands of teachers and police officers on the job. The bill has funded 12,500 transportation construction projects, saving or creating nearly 280,000 jobs in that hard-hit industry.

This year, more construction firms are likely to get a piece of the stimulus pie as work starts on stimulus-funded projects in areas besides transportation, according to the Associated General Contractors.

"The stimulus is one of the very few bright spots the construction industry experienced last year and is one of the few hopes keeping it going in 2010," said Ken Simonson, the association's chief economist.

"The stimulus will keep a bad situation from deteriorating further. That may not make for great headlines, but it is welcome news for construction workers anxious to continue receiving paychecks," he said.

Simonson is right—keeping a bad situation from getting worse doesn't make for a great headline.

But that, by most impartial accounts, is what the stimulus did. Is that meager accomplishment worth $787 billion? That's worth debating, especially now that Congress has to decide whether to pour more money into a still-weak economy.

Obama noted, for example, that state budgets have not yet recovered, and "we could potentially see layoffs taking place this year because we haven't re-upped in terms of providing some help to those states and local governments."

Even if you judge the stimulus a success, it's left us with a difficult problem. There are still plenty of areas of the economy—such as state and local governments, aid to the long-term unemployed, and access to credit for small businesses—that cry out for more federal assistance.

How long can Washington keep coming to their aid, especially when it faces trillion-dollar budget deficits as far as the eye can see?

Eventually, the economy will have to stand on its own two feet without any more stimulus. Next week, Congress will begin deciding if that time has come, or if the economy needs billions of dollars more from a federal government that already has maxed out its credit card.

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Kent Hoover is the Washington bureau chief for bizjournals.