Skepticism About Biden's Stimulus Claims
"Over 90 days have passed since you signed the Recovery Act, and significant progress has been made toward implementation. We remain ahead of schedule in most programs and, due to efficiencies and sound management, many projects are coming in under budget. As you know, we set a goal of outlaying 70 percent of Recovery Act expenditures by the end of 2010; after just three months, we have already obligated more than $88 billion."
So says Vice President Joe Biden in his first quarterly report to President Obama about the stimulus package. It sounds pretty good.
But a wide array of folks have this to say: Not so fast.
Here's a little roundup of coverage of the announcement.
"In his first quarterly report on the nation's stimulus package, Vice President Joe Biden uses anecdotes to paint a glowing picture of an economy on the rebound. In reality, the picture is incomplete and the colors far more muted," said the opening of the story by AP writer Matt Apuzzo.
The Wall Street Journal take: It's a mixed bag.
"The Transportation Department has also gotten out a lot of the money under its jurisdiction, mostly because states already had lists of projects they wanted to get done. The stimulus program's distribution process only required such projects to be approved by the department," the Journal story said.
But. "Other agencies are facing a lengthier process in allocating money. The Energy Department is set to allocate $45 billion, almost as much as Transportation, but it has only disbursed about 8% of its money, mostly to increase the size of existing contracts for nuclear cleanup projects," the Journal said.
From the Christian Science Monitor:
"Eventually, the stimulus bill may pump an estimated $787 billion into the US economy. But that will take time. So far, Washington has laid out only about $28 billion - less than 3 percent - of the outlays authorized by the legislation.
"Of that money, about $16 billion has gone for one activity, medical assistance to states, according to the just-released first quarterly report to President Obama on the progress of the American Recovery and Reinvestment Act.
"The medical spending flows through existing programs such as Medicaid and thus can be pumped out quickly, notes the report, released May 13 and signed by Vice President Joe Biden.
"'Other programs, such as high speed rail, require more extensive planning and are projected ... to outlay more slowly,' says the report."
Let's revisit the AP story, which seems to have documented well some of the contradictions between the claims and the reality.
"BIDEN SAID: First-time homebuyers are 'driving increased activity in the home sales market,' while mortgage and title companies are hiring more workers because of the first-time homebuyer tax credit included in the stimulus bill.
"THE FACTS: The report cites anecdotes from a New Orleans business journal to back up the claim. It's true, buyers are taking advantage of the $8,000 first-time homebuyer tax credits. The IRS said more than 567,000 tax returns claimed the credit in just the first weeks of the program. But that hasn't provided an immediate turnaround in the market.
"Since February, sales of existing homes have fallen 3 percent and new home sales are down .6 percent.
"And the number of jobs in the real estate industry has declined by about 20,500, according to the Department of Labor.
"There are signs that the housing market is improving. But the numbers suggest that if the market bottomed out, it did so in January, before the stimulus was passed.
"BIDEN SAID: Employment agencies are placing more workers in jobs, and demand is up since February.
"THE FACTS: The report cites an interview with an employment service manager quoted in the same New Orleans business article. The anecdote may be true, but it's impossible to extrapolate that any further, even just to New Orleans. The city has lost more than 200 jobs since February. Overall, Louisiana lost 16,085 jobs over the same span, according to the Department of Labor.
"THE WHITE HOUSE SAID: The stimulus has created or saved 150,000 jobs.
"THE FACTS: Since February, the nation has lost more than 1.3 million jobs, according to the Department of Labor. To make the case that the country created jobs over that same stretch, the White House has put forward a benchmark of jobs created 'or saved.' The argument is that the job numbers would have been even worse had it not been for the stimulus, and the difference between those numbers is a net positive.
"To visualize that disconnect, consider this: The administration has promised to create or save 600,000 more jobs in the next 100 days. Even if the nation loses another 5 million jobs during that span (a highly unlikely prospect) the White House could still claim success.
"There are few hard numbers when it comes to tracking stimulus jobs. The Obama administration numbers are based on estimates by the White House Council of Economic Advisers, based largely on a formula Obama's transition team put forward. It estimates the effect of tax breaks, government spending and social programs on job growth.
"Spending money will put people to work. But spending has a cost. At some point, Washington will have to pay for this program, either by raising taxes or interest rates, and those policies typically hurt job growth. The Obama administration's job data do not take into consideration this back-end cost, an omission some economists, particularly conservative economists, say is a flaw in the analysis."
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