Tuesday, February 10, 2009

Stimulus enough to work?

A couple of articles today have me feeling a bit better about the stimulus bill, and its potential effectiveness, despite its weakening in the Senate version.

First is this article in the NYT reporting the amount of money going to education even after the Senate version's cuts:

The Obama administration and Democratic lawmakers proposed unprecedented levels of education spending in both the House and Senate stimulus bills. And even after cuts made Friday by a bipartisan group led by Senators Ben Nelson, Democrat of Nebraska, and Susan Collins, Republican of Maine, the Senate bill would still provide $80 billion in emergency spending for public schools and state universities, well above the Department of Education’s current $59 billion discretionary budget.

Both the House and the Senate would hugely increase spending on Title I, a program of specialized classroom efforts to help educate poor children, and on education for disabled children.

The House bill would raise Title I spending over two years by $13 billion; for the current fiscal year, spending would rise to $20 billion from about $14.5 billion. The two-year increase in the Senate bill would be $11.4 billion.

Both the House and Senate bills would also increase federal spending on special education by $13 billion over two years.

That even the Senate bill would provide more money than the Department of Ed's annual discretionary budget sounds rather impressive.

And then there is this post by Kevin Drum detailing the combined impact of the stimulus bill along with the expected budget deficits to run over the next few years:

So: With the cut, total fiscal stimulus over the three years starting last October comes to $2.7 trillion and 12 million jobs. If we had kept spending at its higher level, it would have come to $2.8 trillion and perhaps 12.5 million jobs. That's a difference of about 3%.

Now, the nature of that 3% is hardly defensible. State aid and school construction are way better uses of the money than a lot of stuff that was left in the bill. Still, the fact remains that the total amount of stimulus over three years is $2.7 trillion, not the $800 billion number that dominates the discussion. That's a helluva lot of stimulus, and if it doesn't do the job it's doubtful that $2.8 trillion will do it either.

I'm a little dubious as to how accurately X amount of government spending leads to X number of jobs. But if this is the bigger picture as Drum suggests, the ultimate effect of national policy should be a positive one.

It also reinforces something I posted about last week--the ultimate role played by the upcoming budget proposals and discussions, and the filibuster-insulated Reconciliation process that governs it. The stimulus money obviously can get fast-tracked sooner, while the money to eventually to come out of budget reconciliation is several months down the road. Still, the stimulus is far from being the end point of government intervention in the economy.

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