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The tension between long-term investments and short-term stimulus

If I told you that the federal government had appropriated $34 billion in the stimulus package to help doctor's offices and hospitals computerize their medical records but that the program was running into problems, what would you guess was going on?

My assumption, when I first saw the article, was that the standards were much too weak and the program had become a giveaway. Turns out that the truth is the opposite: The standards were extremely stringent and so the money isn't doing as much good as one would hope.

So far as problems go, this one isn't very difficult to fix: You relax the rules, which it seems the administration will do this summer. Starting high and then backing down to a compromise where the medical community is still stretching will probably mean we get a better medical-record infrastructure when all is said and done. But it also means that the programs hasn't worked very well as stimulus qua stimulus, as the money hasn't gone out very fast.

That goes to one of the difficulties of the stimulus, which is that there can be a tension between the investments you want and need to make and the investments that deliver that largest short-term boost to the economy. The Obama administration tried to get over this ideologically by saying early on that it saw the stimulus as addressing both long-run and short-run growth, but that's not how most people saw it, and it has not been a big part of the conversation since then.

By Ezra Klein  |  June 14, 2010; 3:13 PM ET
Categories:  Stimulus  
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