White House: Stimulus Was Worth It
President Barack Obama's $800 billion-plus economic stimulus law may not be earning good grades with the public, but the White House claims it's on track to produce the promised 3.5 million jobs.
Friday's report says about two-thirds of the stimulus money has been spent via tax cuts or government spending and remarkably little of the money has gone out fraudulently.
The stimulus bill was passed in February of last year to try to reverse the worst recession since the Great Depression. The White House and many economists credit it with giving the economy a needed jolt. But Republicans say it's been ineffective, citing a nationwide unemployment rate still hovering near 10 percent.
"We continue to show consistent progress on your commitment to create or save 3.5 million jobs by the end of calendar year 2010," Vice President Joe Biden wrote in presenting the report to Obama. "In addition, over 95 percent of working families have seen their taxes lowered."
The idea driving the stimulus bill was to inject demand into the economy through federal spending and tax cuts. The report says about $300 billion in spending has gone out for jobless benefits, government projects, and grants to states to ease layoffs of workers.
Another $243 billion has gone to businesses and individuals in tax cuts, including Obama's signature "Making Work Pay" tax credit of $400 for individuals and $800 for couples.
The nonpartisan Congressional Budget Office says the legislation is responsible for as few as 1.4 million jobs and as many as 3.3 million. The report also cites a study by noted economists Mark Zandi and Alan Blinder, who estimated that unemployment would have spiked to 11.6 percent by the end of this year had the stimulus measure not been passed.
Still, frustrated voters give the stimulus program low marks in opinion polls, such as a CBS News survey in July in which 56 percent of respondents said it had no impact, while 18 percent said it actually made the economy worse.
Republicans say the measure is a leading example of wasteful spending by Washington Democrats. And they hammer a White House prediction that the measure would limit unemployment to 8 percent.
"The administration predicted that unemployment wouldn't rise above 8 percent if the trillion-dollar stimulus became law," said Senate GOP Leader Mitch McConnell of Kentucky. "We know how that turned out."
The stimulus is winding down in many ways. The $400-$800 tax credit expires at the end of the year, and there's little talk in Congress of renewing it as Obama wants. A small, but popular - even Mississippi Republican Gov. Haley Barbour salutes it - stimulus program that is credited with creating 250,000 subsidized jobs expired on Thursday, as Republicans blocked efforts to renew it.
But other pieces, such as unemployment insurance for the long-term jobless and aid to state governments and local school boards have been renewed this year after much wranging in Congress.
Some elements are still getting underway, such as high speed rail grants, federal building projects and billions to upgrade information technology for the health care sector.
Republicans have promised to try to roll back the measure if they take over control of Congress, but that effort is unlikely to succeed so long as Obama wields his veto pen.
According to the report, just 0.2 percent of stimulus awards are under investigation for fraud, far less than is typical of other federal programs.
But Republicans such as Sen. Tom Coburn point out dozens of kooky-sounding stimulus projects, such as $554,000 to replace the windows of a visitor center at Mount St. Helens in Washington State that was closed three years ago and nearly $90,000 to replace a five-year-old stretch of sidewalk in an Oklahoma town that led to a ditch.
But Friday's Commerce Department report on construction spending cites a big jump in federal buiding projects for being responsible for reversing a slide in construction spending.
Construction spending edged up 0.4 percent in August following a 1.4 percent drop in July, the Commerce Department reported Friday. While spending on government projects rose 2.5 percent, spending on private construction projects dropped to the lowest level in 12 years.
"Federal investments from the stimulus and other programs are protecting some construction workers from a devastating downturn in private construction activity," said Ken Simonson, the chief economist for the Associated General Contractors of America.