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Posted at 2:11 PM ET, 12/29/2010

Gary Burtless on the stimulus

By Ezra Klein

On Monday, I linked to this op-ed from Tom Esvlin, Vermont's "stimulus czar," lamenting the way the money got spent. "Although I'd like to think Vermont did better than many states, much of the money ended up continuing bloated programs rather than providing a transition to a sustainable future," he wrote. That same day, Brookings' Gary Burtless e-mailed in a rebuttal that's worth quoting at length, as it's a very clear description of where the stimulus funds actually went, and why such a small percentage was directly devoted to building things. So here it is, with some edits for space:

The main problem with that silly op-ed is that it refers to only a small slice of the actual federal spending on stimulus authorized by the Feb. 2009 legislation. So far, the overwhelming share of that stimulus has been devoted to three items: Tax cuts for households; direct benefits to people adversely affected by the severe recession, mostly the unemployed or poor; and fiscal relief to state and local governments. Vermont did not need any "Czar" to receive or administer funds under these programs. The money for them quickly left the U.S. Treasury without any effort on the part of the Czar who penned this highly misleading op-ed piece. People in Vermont *directly* received benefits from the stimulus as: (1) lower federal tax withholding from their paychecks; (2) extended unemployment benefits; (3) premium subsidies so they could maintain their health insurance after they were laid off from a job in which they received health protection; (4) miscellaneous benefits (e.g., for college costs) under one provision or another; and (5) aid from the Treasury that permitted Vermont and its localities to finance their Medicaid and K-12 education programs without hiking taxes or lowering other public spending. The kinds of infrastructure spending for which the WSJ's "Czar" had some responsibility constituted a small percentage of the stimulus the Congress authorized for 2009 and 2010.

In FY 2009 and 2010, the EXPECTED spending on infrastructure and other items for which the Vermont “Czar” may have had partial responsibility accounted for just 11% of anticipated spending under the stimulus legislation. The other 89% had nothing to do with the programs criticized by Vermont’s supposed Czar. Thus, all of his complaints – even if justified – are essentially irrelevant to the programs mainly supported by the stimulus law … at least so far. Obviously, in the years 2011-2019, that kind of stimulus spending would have accounted for a vastly larger share of outlays. But (and perhaps Vermont’s Czar has not kept up with this because he does not read a daily paper) the Congress just passed and the President just signed ANOTHER stimulus program consisting of more than 90% personal and business tax cuts and less than 10% extensions in unemployment benefits. So far as I know, very little additional spending has been authorized for those hated infrastructure / technology investment projects. Below is the CBO’s year-by-year analysis of the spending authorized under the Feb. 2009 stimulus law:

image006burtless.png

My own private view is that the country would probably have been better off if *MORE* of the original stimulus had been devoted to infrastructure / technology investment (more of it would have been spent on goods and services produced in the U.S. rather than China, East Asia, and Europe). Setting aside that consideration for a minute, what infuriates me about the piece cited in your blog is that it reinforces the very widespread but totally erroneous impression that Congress and the Administration were unaware of the administrative hurdles to fast spending that the “Czar” points out in his op-ed. Those hurdles were understood from the very beginning, which is precisely the reason that infrastructure/technology investment projects constituted such a small percentage of the total package. It is perfectly legitimate to criticize the pace of spending on these projects, but it is utterly deranged to think that the slow rate of spending on the projects constitutes a serious indictment of the spending authorized under the Feb. 2009 stimulus program. Very little of the expected spending under the stimulus program (at least so far) was supposed to be devoted to those projects.

By Ezra Klein  | December 29, 2010; 2:11 PM ET
Categories:  Stimulus  
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Next: A grim lesson from the stimulus

Comments

Gary:

I'm sorry you think my op-ed is "silly" but there's a lot you don't understand about Stimulus.

Although the law didn't require it, all states had czars at the encouragement of the Obama administration, which hosted several Washington sessions for us along with the National Governor's Association. Vermont Governor Jim Douglas, although a Republican, was a supporter of stimulus. We wanted to make it work for Vermont and hoped it would work for the country.

Many of the programs which you think flowed directly actually went through state governments. we had to certify and assure that the rules were followed and report. For example, Vermont actually had to repeal a minor change to Medicaid eligibility it had made prior to the enactment of stimulus in order to eligible for the Medicaid money. That took an act of our legislature - part of my job was too coordinate that. Similarly unemployment compensation in Vermont had to change to qualify for stimulus funds - we had to expand eligibility at a time when we should have been making eligibility tougher to assure that the funds were used as intended. Education funds went through the state to the districts.

All money that flowed through the state required appropriations by the Vermont legislatures. There are some states where the governor can simply spend money which comes from Washington; Vermont isn't one of them. the money needs to be appropriated.

I'm not trying to justify my position - I insisted before I took it that I would return my salary to the state (you can't work for a dollar a year without violating the Fair Labor Standards Act). But I do want to point out that we in state government were in a good position to see what worked and what didn't. In the spirit of transparency which has asways been part of the Stimulus story, it's my responsibility to write the good and the bad without sugar-coating.

Tom Evslin
Former Chief Recovery officer
State of Vermont

Posted by: tevslin | December 30, 2010 7:30 PM | Report abuse

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