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Monday
Sep 01st

Stimulus plan averted a second Great Depression

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Although President Obama’s $787 billion economic stimulus plan created or saved enough jobs over the past year to prevent the United States from plunging into the second Great Depression, most Americans grossly underestimate what the package has accomplished.

"One year later, it is largely thanks to the Recovery Act that a second depression is no longer a possibility," Obama said at an event marking the bill’s anniversary. He said the stimulus package has saved or helped create 2 million jobs.

Not surprisingly, Republicans disagree.

“In the year since the Democrats’ stimulus program was enacted, over 3 million jobs have been lost, billions of dollars have been wasted and an unprecedented debt has been passed on to our children…” said House Minority Whip Eric Cantor (R-VA)
So, who’s telling the truth?

An analysis by nonpartisan Congressional Budget Office supports the president, saying the stimulus package helped to end the recession and created or saved at least 2 million jobs. That would put Obama on track to reach his goal of 3.5 million jobs over two years.
But try explaining that to your fellow citizens. According to a New York Times/CBS News poll conducted earlier this month, only 6 percent of those questioned believe the stimulus package has created any jobs.

Why such a large disconnect?

Only about 30 percent of the funds have been spent so far, with that figure expected to rise to 70 percent before the end of the year. Another factor is that much of the money has gone directly to the states to preserve jobs that would have otherwise been eliminated or used to extend unemployment and insurance coverage.

According to the White House, 95 percent of American families received a tax cut of approximately $800 for both 2009 and 2010 as a result of the stimulus package.  However, because the money was left in the employee’s paycheck in the form of reduced taxes rather than mailed as a separate check, most Americans did not notice the cut. In fact, only 12 percent of those polled by the New York Times/CBS said they had received a tax cut.

Until recent weeks, the White House did a poor job of touting the success of the program, failing to put a face on those directly benefiting from what is formally known as the American Recovery and Reinvestment Act. As the 1-year anniversary approached, however, various federal departments and agencies were rushing to paint a different picture.

Obama has not been helped by high unemployment rates. When the bill was signed into law, the unemployment rate stood at 7.7 percent. Since then, it jumped to 10 percent before falling last month to 9.7 percent.

Republicans gleefully circulated earlier administration projections that the unemployment rate was expected to rise no higher than 8 percent as a result of the stimulus plan.
In an effort to be more transparent, the administration posted stimulus-created jobs on a special Web site. However, some of the jobs were posted in Congressional districts and zip codes that do not exist.

Administration officials weren’t the only ones embarrassed.

The Wall Street Journal reported that more than a dozen Republicans in Congress voted against President Obama’s stimulus plan yet wrote to federal agencies on behalf of businesses in their districts seeking stimulus funds.

Senator Richard Shelby (R-AL) called the stimulus plan “the socialist way.” Yet, he was part of an Alabama delegation contacting the U.S. Forest Service with a $15 million request for a state program that ended up receiving a $6.3 million grant.

Another Republican, Rep. Paul Ryan of Wisconsin, said the stimulus program amounted to “a wasteful spending spree.” Later, he worked to be part of that spending spree, supporting a grant application to the Department of Labor.

There is no doubt that stimulus package improved the American economy.

The American Chronicle rounded up and posted the following quotes on its Web site:

"Cut through all the numbers, though, and this is what you find: The American Recovery and Reinvestment Act saved us from plunging into a second Great Depression."
-          Stephen Herzenberg, Economist and Executive Director of the Keystone Research Center

"We were looking over the precipice, possibly into a Great Depression…I think it was appropriate to enact a very aggressive stimulus bill. I think it is fair to say that, without the stimulus bill, state and local government budgets would be in even worse shape than they are now."
-          Robert Dye, senior economist for PNC Financial Services Group

A year after it began flowing, the stimulus money still has not reached many small Black businesses. Still, it is far from being the failure that Republicans claim. Given the relative success of the program, perhaps the Obama administration will be stimulated to do more for African-American businesses.

George E. Curry, former editor-in-chief of Emerge magazine and the NNPA News Service, is a keynote speaker, moderator, and media coach. He can be reached through his Web site, www.georgecurry.com You can also follow him at www.twitter.com/currygeorge.
 

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