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One year later, stimulus has mixed record

- The Washington Times - Wednesday, February 17, 2010

A year after it became law, the stimulus package costs more than promised, has failed to keep down the unemployment rate and has faced charges of waste and abuse.

But the federal spending - all of it borrowed - has helped many states avoid painful budget cuts to their education and public safety budgets, and according to official estimates has helped the gross domestic product grow faster than it would have otherwise.

With health care stalled, his plans to address climate change on hold and spending ballooning, President Obama on Wednesday will mark the first anniversary of what's formally known as the American Recovery and Reinvestment Act by inviting to the White House people who have benefited from the money. And he's deploying his top aides to crisscross the country and highlight projects that have helped people and produced jobs.

"Almost 20 million Americans have gotten extended unemployment benefits thanks to the Act, and over 95 percent of working families have had their taxes cut," Vice President Joseph R. Biden Jr., whom the president tapped to oversee the recovery, said in a one-year progress report.

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"Jobs have been created thanks to tens of thousands of projects now under way nationwide. And the groundwork for the economy of the next century is being put in place as we invest in high-speed rail, health technology, broadband, a smarter electrical grid, clean cars and batteries, and renewable energy."

So far, that's proving to be a tough sell. A CBS-New York Times poll released last week found that just 6 percent of those surveyed thought the stimulus has created jobs, while 48 percent said they doubt that it will ever create jobs.

Republicans are eager to tout the stimulus as a failed presidential promise, and have laid plans to attack congressional Democrats in this year's election campaign for supporting the law.

"Americans are asking, 'Where are the jobs,' but all they are getting from Washington Democrats is more government, more borrowing, and more debt piled on the backs of our kids and grandkids," said House Minority Leader John A. Boehner, Ohio Republican.

Mr. Obama signed the stimulus bill into law after touring solar panels at a Colorado museum as a way of showing how the spending would boost clean-energy production and make investments in infrastructure projects the country should be funding.

But most of the money spent the first year went to tax cuts, subsidies to states so they wouldn't have to lay off government workers, and payments to the poor and unemployed. The Center on Budget and Policy Priorities, a liberal think tank, says the law kept 6 million people out of poverty in 2009, and the administration says it provided extended unemployment benefits to 20 million people.

The administration promises that in its second year, spending on infrastructure projects will pick up - beginning with an announcement Wednesday of $1.5 billion for transportation work.

When he signed the law, Mr. Obama said it would save or create 3.5 million jobs over two years, and his administration projected that unemployment would be kept to 8 percent. Instead, unemployment rose past 10 percent and now stands at 9.7 percent, and the economy has shed about 3 million jobs.

Only North Dakota and the District of Columbia have netted new jobs overall in the year since the stimulus law was passed.

"A year from now we may still be waiting for the millions of stimulus jobs and also worrying about that escalating debt the stimulus contributed to," said Brian Riedl, a budget analyst at the conservative Heritage Foundation.

Even some Democrats are worried about the record they have amassed over the past year.

"If I could create one job in the private sector by helping to grow a business, that would be one more than Congress has created in the last six months," Sen. Evan Bayh, an Indiana Democrat who this week announced his retirement from the Senate, told CBS.

The administration says the recession was deeper than first imagined, but insists there's plenty of evidence of how well the stimulus has worked. In his report, Mr. Biden says the law added several percentage points to gross domestic product growth over the last nine months of last year.

Some congressional Republican lawmakers have been accused of hypocrisy for saying the stimulus won't work while sending letters behind the scenes asking for money for local projects. As The Washington Times reported earlier this month, those Republicans often acknowledge in their letters that the projects will create jobs.

In his report, Mr. Biden says fraud has been kept to a minimum, and the record "compares very favorably with both public and private sector experiences."

Republicans, though, point to hundreds of thousands of dollars spent on studies such as the sex lives of female college students as examples of poor spending. And Congress issued a stinging rebuke of the U.S. Forest Service after it directed nearly $2.8 million of wildland firefighting money to Washington, D.C., for a green-jobs program. Congress let the city keep the money, but said the Forest Service must make better decisions in the future.

Pressure is building for another round of stimulus spending. The House last year passed a bill to boost job creation and the Senate plans to take up its own bill when it returns from a weeklong break.

Interest groups also are asking that education and social safety net programs be extended.

Mr. Obama included many of those extensions in the 2011 budget he sent Congress two weeks ago - something analysts said goes against the promises of temporary relief.

The Committee for a Responsible Federal Budget (CRFB) says if Congress enacts all the programs Mr. Obama wants to extend, the cost will jump to $1.5 trillion over 10 years, or nearly double the initial estimate.

"It was never supposed to be the purpose of stimulus to make permanent policy" said Marc Goldwein, policy director for CRFB. The fundamental principle of stimulus is it's a temporary infusion of money into the economy."

He said if Congress does want to extend the programs it should pay for that. Otherwise, the U.S. risks adding to an already difficult debt picture.

But Chad Stone, chief economist at the Center on Budget and Policy Priorities, said the success of the stimulus depends on extending and expanding parts of the law, particularly unemployment benefits, COBRA health care coverage and subsidies to states.

"If that is done we will look back at ARRA and its 2010 extensions as important contributors to a recovery that is beginning to gather real momentum. If we don't, we can look back on ARRA as a policy that kept the economy from going off a cliff and helped start a nascent recovery but one that needed to be supplemented by additional measures in 2010 and wasn't, with the result that the recovery has been weaker than it needed to be," he said.

When it was signed into law, the Congressional Budget Office calculated that the American Recovery and Reinvestment Act would cost $787 billion over 10 years, but last month CBO boosted that figure by $75 billion. The administration, however, has rejected the CBO's assumptions and says it's sticking with the $787 billion cost.

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