Tuesday, September 14th, 2010 - 6:30
Monday, September 13, 2010 - 19:41
What does the public have against the Recovery Act? A noted finance writer has some interesting insights.
Journalist and author James Surowiecki offers an extremely thoughtful commentary about why the Obama administration has had such a hard time getting support for the stimulus and why the word itself is now being avoided, even by members of the Obama administration. In his piece in The New Yorker, Suriowiecki (photo at left) notes, as have other observers (including us) that the Recovery Act became mixed up in the minds of the public with the unpopular Troubled Asset Relief Program (TARP), and that the President's political enemies have exploited that confusion.
In fact, Suriowiecki argues that even though he believes the stimulus was successful, "paradoxically, the very things that made the stimulus more effective economically may have made it less popular politically." For example:
- Since lump-sum tax refunds tend to get saved not spent, the stimulus was designed so that the tax cuts would be spread out in each paycheck rather than received in one lump sum. That meant voters never really noticed they were getting a tax cut.
- Billions were devoted to avoiding layoffs and spending cuts in state and government. But says Surowiecki, “saving jobs isn’t as conspicuous as creating them.”
- The extension of unemployment benefits was an “excellent use of stimulus funds” but it didn’t get significant attention from the folks who weren’t unemployed.
- Money was backloaded so that only a third was spent in the first year. That made sense in that it lessens the threat of a double-dip recession, the author says. But it made the stimulus less potent in 2009 and reinforced the sense that it wasn’t effective.
- Many of the spending areas – broadband, the smart grid, the clean energy industry – will have “a transformative impact” in the future, but don’t provide visual evidence in the present.
Photo courtesy of the New Yorker