EDITORIAL: Stimulus perspective

The federal stimulus package passed by Congress earlier this year – officially known as the American Recovery and Reinvestment Act – could have been better crafted.
More of the $787 billion should have been allocated to jobs-producing public works and infrastructure projects, such as highway construction. There were probably too many strings attached to spending by the states.
But Republican efforts to write off the stimulus as a failure are premature.
For one thing, it’s been five months since passage and even the Obama administration acknowledged early-on that it might be a year or more before the full effects were felt. Only about one-third of the money committed nationwide has been spent.
For another, consider the impact of the stimulus on state budgets like Mississippi’s that would have been in dire straits without it. Our state finally has a budget, and more than $500 million of the $6.8 billion is from the stimulus.
Without that infusion, Mississippi – whose revenues for the just-completed fiscal year fell $400 million below projections – would have had to make dramatic cuts in state services. Education, Medicaid, public safety and other vital programs would have been hammered. Public sector jobs would have been cut, but there would have been losses in the portions of the private economy like health care connected to state spending as well.
With a minor exception or two, state officials of both parties were more than willing to accept this rescue from the federal government. What would they have done without it?
It’s true, as Gov. Haley Barbour says, that state government will have challenges in maintaining the spending level made possible by the stimulus if economic recovery is slow and the money from Washington runs out. But the idea is to tide the state over until things pick up, and while government doesn’t create wealth, drastic curtailment of services and jobs in a severe recession would have been the wrong course.
It’s rarely mentioned, too, that the $787 billion stimulus package is not all spending – not by a long shot. Some $282 billion of that figure, more than one-third, is in tax cuts.
That the verdict is still out on the stimulus does not, however, justify growing discussion among Democrats and some economists – not yet the White House – on the need for another stimulus bill. Concerns about the deficit and the national debt are valid. It doesn’t make sense to move hastily toward another deficit-ballooning stimulus when there hasn’t been time to measure the impact of the one passed in February.
If describing the current stimulus as “failed” is premature, so is talk of another. Let’s keep some perspective here – on both sides.

NEMS Daily Journal

Click video to hear audio