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Is the stimulus working?

Posted on November 10, 2009 by Frank Di Giacomo, Publisher

The federal government's watchdog office for stimulus legislation passed last winter released its first official figures on how many jobs have been created and how much of the money has actually been spent. There is good news and not so good news in the report, and its contents have implications for how public transportation is being perceived in Washington.

According to the report released just before this issue of METRO went to press, the legislation, so far, has only created 30,000 new jobs, which got the conservative critics going. However, these critics failed to mention that those job numbers were the result of the first $2 billion. In other words, not even one percent of the $225 billion in program spending has actually gotten into the economy. The rest has been obligated, which means grants have been approved but not yet spent by the receiving agencies or their contractors. The money that has actually been spent has been from the tax cuts, unemployment insurance and other benefits paid to those who have lost their jobs.

That means much more money will be flowing soon, and, presumably, more jobs will be created. For its part, public transportation and the rest of the U.S. Department of Transportation is way ahead of schedule. A little more than 92 percent, or $7.6 billion, has been obligated by the Federal Transit Administration (FTA), with another $300 million in flexible highway funds transferred to transit. Therefore, transit is getting its money out the door faster than other programs, a situation not lost on politicians as some consider a second stimulus if unemployment numbers don't start to come down.

Does the stimulus matter?

The far right wingers say they won't support another stimulus package because, they assert, it isn't working. They seem to be the only ones, though, as most economists have said increased government spending has helped the economy at least begin to bottom out. Tax cuts in the stimulus package, the favorite weapon of conservatives, have had less to do with recovery than spending, because most people either saved the money or used it to pay down credit card debt, and nearly all economists have said that we need people and businesses to start buying again if the economy is to recover.

Obama Administration officials have admitted that the state of the economy was much worse than they thought when they took office and stimulus funds were taking longer to get out the door than they wanted. Still, most independent experts think that the stimulus spending has added at least one percentage point to economic growth in each of the last two quarters - not enough to create many new jobs, but a much better situation than the 18 months before.

This is why transportation spending looks good right now. If it looks like transit and highway programs contributed more than other programs in creating new jobs, then politicians may look to our industry if talk of another stimulus gets more serious. Or, it could help authorization. Either way, we need to make sure that the money turns into contracts as fast as possible, hopefully ahead of schedule - just as the FTA has done with grants.

 

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