Critics say Obama’s economic bill lacks stimulus

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From $400 million for NASA climate-change research to $650 million for digital TV converter-box coupons, the unprecedented spending in President Obama’s economic stimulus plan is provoking questions about whether it can create jobs and jolt the country out of recession.

The $825 billion bill, which is headed for likely House passage Wednesday, is being scrutinized increasingly by Republicans and economists because it doles out billions of taxpayer dollars for everything from the 2010 census to university research to contraceptives at family-planning clinics - areas far removed from the meltdown in finance, housing and automotive industries.

“This bill is not all stimulus,” said David M. Walker, the former head of the Government Accountability Office and president of the fiscal issues advocacy group Peter G. Peterson Foundation.

He said the potential stimulus effects from the bill are diluted by spending on government facilities and public-assistance programs. “We ought to have open and honest discussion and debate about the merits of each,” he said.

See related story:Stimulus bill a ‘moving target’

The rescue package, dubbed the American Recovery and Reinvestment Act, pours $41 billion into local school districts, $1.1 billion into Amtrak, $600 million into buying energy-efficient cars for the federal government, $275 million into fixing State Department computers, $200 million into sprucing up the National Mall, including new sod, and $50 million into the National Endowment for the Arts.

“It’s ridiculous. It won’t work. It won’t stimulate,” said John Seater, an economics professor at North Carolina State University. “Any kind of spending will stimulate the sector of the economy where the money is spent, but I don’t know that these industries are depressed. … You can’t just move somebody over from housing construction to climate research.”

Mr. Seater and other conservative economists suggest reducing the marginal tax rate to create incentives for business growth.

“It’s not like this is the 1930s and this is the first time we’ve done this,” Mr. Seater said. “We’ve been doing this for 70 years, and we’ve learned a few things. But you wouldn’t know it from what is going on in Washington.”

Meanwhile, Mr. Obama’s plan is backed by economists such as Johns Hopkins University professor Bruce Hamilton, who said the price tag is about the right size to plug an expected $1 trillion loss from the U.S. gross domestic product over two years. After that, he said, it doesn’t matter where the money is spent.

“It takes workers to put sod on the Mall,” Mr. Hamilton said.

The House version of Mr. Obama’s plan offers $275 billion in tax cuts, including a $1,000-per-couple income tax cut for most Americans and a doubling of expense write-offs for small businesses. It doesn’t reduce the marginal tax rates, a measure pushed by Republicans but rejected by Mr. Obama.

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