On the first anniversary of President Barack Obama signing into law the American Recovery and Reinvestment Act of 2009, most RBJ Daily Report readers are not impressed with the effects of the stimulus.
By a margin of 60 percent to 40 percent, respondents to this week’s Snap Poll said the $787 billion stimulus program has been negative for the economy. Nearly the same amount—some 57 percent—said the U.S. economy is still in recession.
In its most recent quarterly progress report on the stimulus program, the Obama administration said the act has played a crucial role in restoring economic growth. The economy shrank at an annual rate of 6.4 percent in the first quarter of 2009, when the law took effect; it started growing again in the third quarter.
Rep. Louise Slaughter, D-Perinton, said Monroe County has received more than $338 million in stimulus funds. Critics, however, point to the unemployment rate, which remains around 10 percent nationally, and say the spending has done little to save or create jobs while increasing the nation’s debt.
Roughly 670 readers participated in this week’s poll, which was conducted Feb.15 and 16.
Has the $787 billion stimulus program been positive or negative for the U.S. economy?
In your view, is the U.S. economy still in recession or has the recovery begun?
Still in recession: 57%
The recovery has begun: 43%
Here are some readers’ comments:
Reputable economists are largely in agreement that without the stimulus program, the recession would have been deeper and lasted longer than it did. If the stimulus had deficiencies—although I’m not sure lack of job growth counts, as job growth always lags other indicators—that’s hardly a repudiation of the effort; it merely means that more should be done.
—Matthew D. Wilson
The stimulus program should be more accurately called a wasteful spending program. Money was given away to boost spending, but for programs that provided little value or sustained activity and will cost us dearly with higher deficits and potentially much higher inflation. It was a knee-jerk reaction to a financial crisis brought about by other poorly thought out government programs.
—Bill Wyatt, Fairport
While it may be satisfying to indulge one’s own political biases with a knee-jerk response, the simple fact is that it’s too early to determine with any acceptable degree of accuracy whether stimulus spending has had a positive or a negative impact on the U.S. economy. Who knows? Perhaps it has been a wash.
—Michael J. Nighan
Our economic challenges didn’t spring up overnight. It will take good leadership, self-restraint, stronger regulations and a more global focus on policies and practices to completely turn our economy around. As a nation and community, we need to become more strategic by providing world-class goods and services that add long-term value. Government must become more disciplined in spending and unfortunately generate more revenue. Shareholders need to return to long-term focus, CEOs need to do more with less, and we all need to become more innovative, creative and not take anything for granted.
—Frank Orienter, Rochester
The American Recovery and Reinvestment Act of 2009 has been a total failure. Unemployment has stagnated at approximately 10 percent, and GDP has been eroded drastically. President Obama and his economic team had touted this stimulus package as the one act that was going to cause our economy to quickly flourish again. This has not happened. If anything, the economy has deteriorated and those who have been unemployed for an extended period of time have given up seeking gainful employment. In my opinion, Mr. Obama acted too quickly and without all of the economic facts necessary to make an educated decision. In his haste to make the previous administration look even worse than it did, he squandered a lot of money and has yet to reap any rewards for his efforts.
—Phil Turturici, Absolute Consulting
Ask the banks, auto companies or a select few insurance companies, and you might hear that the stimulus was helpful and the recession is over. Ask some of the 6.5 million Americans out of work, and you’ll get a different perspective. I was, and remain, against the massive bailouts, and I am also dismayed by the paltry efforts to stimulate small business—which is the growth engine of this country. The current administration is so focused on the agenda it has waited 60 years to push through that it’s totally lost touch with mainstream Americans. No wonder why a common-sense senator like Evan Bayh (D-Ind.) is leaving.
I knew an individual whose wife maxed out his credit cards and left him. The wife had a great time spending the money; the businesses gleefully sold her what she wanted. He still had to pay the bill, but now he is broke. The stimulus is the same, just on a bigger scale.
—Bill Lanigan, Chamberlin Rubber Co.
Obama ran on a promise for a tax cut for the lower 95 percent of American wage earners. If he had stuck with that, he would have found out what JFK, Ronald Regan and George W. Bush found out about tax cuts and the economy. The stimulus was a package for Democrat special interests, and, as we move forward in 2010, the bulk of the remaining stimulus package will go to re-elect Democrat incumbents. The only jobs generated and "saved" by the stimulus were government jobs. Let us keep our money. Don’t take it away and give us back a lot less. By the definition: “A recession is when my neighbor loses his job, and a depression is when I lose my job”; it’s still a recession. When the unemployment rate hovers around 10 percent and the real unemployment rate is about 16 percent to 17 percent, you’d have to be a pretty strict economist to call it a "nonrecession." Those "green jobs" will cost us too much green.
—Clifford Jacobson, WebHomeUSA.com
Without the stimulus that kept public services and public jobs going in every state, extended unemployment, and created at least some private-sector jobs, the added unemployed would have further reduced consumer spending. This snowball going downhill would have had us in a bigger hole that would take even longer to climb. Bipartisan compromise reduced it 25 percent from what most economists said was needed, all for jobs, then by another 33 percent for tax cuts. Now the bipartisans scream the stimulus failed and it’s all about jobs?
—Jim Bertolone, AFL-CIO
The stimulus has been effective in slowing the rate of job loss, particularly in governmental entities. Dollars and no interest credit provided large banks have not been as effective as they could have been in stimulating the private sector largely because the banks have focused on using the money for their own profit rather than providing credit to businesses for economic growth. While recovery has begun, job growth of new jobs will be slow, trying the patience of all. I see the problem as economic, rather than partisan politics, with the hope that our Congress will start working together for the good of the people rather than themselves…as doubtful as that seems to be.
I believe the stimulus effort is a prime example of good intentions not providing expected positive benefits. The overall plan has not been managed very well. It is not clear that there was enough thought given, relative to a holistic approach, to disburse dollars to the areas that would actually provide global domestic stimulation. There continues to be very high unemployment, small to midsize businesses continue to fail and put an additional burden on the economy. Major companies that benefitted from stimulus dollars have returned to the practices that got them into trouble. The economy of the country continues to be stressed. It will not take a huge event to throw the country’s economy into a devastating turmoil. No, I cannot say there has been a significant benefit to the billions of dollars that have been injected into the economy.
—William Nash, Ultrafab Inc.
Stimulus? What stimulus? It hasn’t done a thing for our business. You still have to make your money the old-fashioned way, you have to earn it! Stimulate business, by lowering our taxes and get the government out of our way.
—Glen VanBuskirk, Precision Technologies
Hmmmm. Let’s see 10 percent vs. 20 percent or 25 percent. From a longer term economic standpoint short-term debt is not necessarily a negative… next critical step, a transparent plan to pay the debt back will add further economic stability and confidence into the future.
So much of the stimulus money has been spent to plug budget gaps and allocated to support pet projects (high-speed rail?) that it’s simply stood in the way of desperately needed, meaningful fiscal reform.
Without the stimulus, the economy would not have begun to rise in the 4th quarter of 2009. Also, another 1 or 2 million people would be unemployed.
—Mike Bleeg, Strategic Results
The stimulus bill is a shorter term measure to pull the economy back from the brink of depression, which it has done.
—Pam Klainer, Klainer Consulting Group LLC
Having recently (re)joined the ranks of the unemployed as a result of corporate downsizing and restructuring, I have yet to see substantively positive impacts on employment locally and the economy generally. Setting aside the big bank bailouts that brought massive financial windfalls to the banks’ executives, far and away the worst "stimulus" effort was the "Cash for Clunkers" program. To make that program a success, what needed to happen was that financially disadvantaged individuals should have been allowed to purchase (at scrap value) the perfectly roadworthy cars being traded by new car purchasers, and have their old, barely-serviceable vehicles be the ones sent to the crusher. The financially disadvantaged are the ones who, lacking the means to do better, are driving the true safety and efficiency "clunkers." This program was an insult to the environment, to the financially disadvantaged, and to the economy.
—Christopher Burns, Rochester
Most of the stimulus package has not been spent. The stimulus that has been spent has allowed Wall Street to pay bonuses for failure at the expense of future generations. The stimulus funded pet projects, such as those supported by Slaughter, simply pays back supporters but does nothing to reduce the jobless rate. What a disgusting fiasco. I can’t wait for the next election cycle.
It really doesn’t matter whether you think it was good or bad for the economy because we’ll never truly know. What’s likely, though, is that there would be some areas in a worse shape than they are now without it.
—Richard Stevenson, co-founder and CEO, CobbleSoft International
The bill may have had a temporary placebo effect for the American public. This came at a time of great concern on where the economy was heading, but was a very expensive Band-Aid. While the bill has helped very specific industries and companies, it did not jump start the economy nor did it create sustainable jobs. The federal government and its inefficiencies have most likely squandered more than half the money. It is business as usual–handing out with one hand, while the other is in your pocket picking you clean.
—Carlo Jannotti, Forward Branding & Identity
What stimulus! A small recovery has begun but not by any doing of the government rather by the natural economic forces that are present in what is left of our free market system!
—Peter Short, JJ Short Associates, Inc.
The federal government had the obligation to help the economy to recover–independent of what culprits caused it. The huge infusion of money did the job it was intended to do. The sad thing is that those who were rescued now claim the success and the rewards, while they refuse to now do their job, mainly with unemployment. The reported $90 million bonus for one person translates to $1,000 for 90,000 people! They would spend it fast and help the economy to recover speedily. The $90 million bonus only helps one person. And, the few who profited refuse to contribute to repay those costs that came with the economic melt-down. It is clear that the common folks, many unemployed, are asked to pay for the bail-out without receiving any benefits. Think of that America!
—Ingo H. Leubner, Crystallization Consulting
The plans short-sighted approach of creating temporary jobs is not the answer, and shouldn’t be a ballyhooed as a sign of success by the Obama Administration. There was a relevant story on NPR this morning, entitled “Stimulus Funds Help Complete Missouri’s Rt. 60.” There was a great example in the story where 40 construction workers were rehired by a firm that had previously laid them off last year, to improve Route 60. After completing the project, they were subsequently laid off again, and remain unemployed since then, according to the interviewee in the story. Temporary employment is not real employment. Creating permanent, well-paying jobs to stimulate our consumer-based economy is the only answer to what ills us.
—Gary A. Stafford, Chili
Two programs should have been the target for the funds: 1. Expansion of the AmeriCorps program: A. Upon graduation from high school or upon reaching age 18 all youths are required to serve their country for two years. Service can be in the military or in the (expanded program) AmeriCorps program. 2. The Social Security program (retirement safety net): A. Should have been funded to help stabilize and ensure the programs existence in the years to come. Need to give confidence and “security” to the baby boomers so they will/can retire. Rationale: Today’s youth would have a two-year period to explore new options for their future while learning new skills (return of the CCC). At the same time the nation would benefit from the service they would provide. With 70 million baby boomers and 80% (my estimate) unable to afford to retire they will need to remain in the job market into their 70s. No rotation to retirement means fewer openings for incoming youth in the job market – basic logjam. By helping folks at both ends of the spectrum the “life cycle” of the country can be restored. Obviously these ideas need a lot more explanation but basically without the stepping aside of the old and the incoming of the young to the market the economy is going to fall in upon itself since there will be no expansion. As far as bailout money for the economy – government needs to be an observer of the business cycle not a participant.
Let’s call the stimulus plan what it really is – a massive spending plan with debatable benefits that do little to outweigh the cost. If leaders really want to stimulate the economy and create jobs, there’s only one proven way to do it: CUT TAXES! Time over time throughout history, it’s been proven that tax cuts work – when businesses can start, grow and prosper, employment and the economy grow. Hey Washington – it’s not rocket science!
—R. Canley, small-business owner, Fairport
While the impacts have been positive, they were not worth the cost both now and for the future. It appears that most of the job creation has been in either government or government related/subsidized industries. The continued rise in the size and cost of government will ultimately be negative for our country.
—Robert Zinnecker, Penfield
Interest rates have gone up. Mortgage lending is tight. Home equity equations show less house values and lower percent house equity for borrowing. Percentage of unemployment is high. No help for small business. No lending to real small businesses. Doesn’t sound like a recovery to me!
—Ed Schlueter, president, Medgraph Inc.
The stimulus program has been an utter failure. It had no provision to stimulate business to create private-sector jobs. The only increase in jobs over the last year has been in the government sector. The bill, which at the time was the single worst piece of legislation in American history, was passed in the night and was so important that none of the members of Congress had time to read it before voting for it. In my opinion, anyone who voted for that bill is not qualified to be in Congress and should be voted out of office at the earliest opportunity. As a consequence of squandering $800 billion that we don’t have, we now are embarked on a path of servitude to the Chinese and with no capacity to pay the money back with our government impaired economy. The Congress needs to cut spending by $1 trillion for the next fiscal year.
First-time in history "jobs saved" is a stat. They are completely unsubstantiated numbers. The only numbers that count are the increasing debt, increasing taxes and increasing unemployment. Seeing the sad middle-aged men and women and college students in your town who out of work starts to wear on you as well as them. It’s sad, very sad. The stimulus was a scam plain and simple.
We all know that the stimulus has had a positive impact on saving government, teacher and union jobs. However as we know the unemployment rate remains approximately 10 percent. We also know it will take tax reduction for small to medium size companies to encourage them to again begin to hire employees. Stimulus or no stimulus this has not happened.
My understanding is that the adjusted stimulus number was $819 billion. With 7/8th’s of this money be paid over the next nine years I have to question the impact of 2009 stimulus dollars vs. part of a natural recovery cycle. Regardless of any negligible impact, the increase in associated national debt is completely unacceptable. Future stimulus spending from international creditors should be aborted immediately.
If you throw enough of anything against a wall some of it will stick. The same can be said of the $787 billion stimulus bill. Having politicians target certain parts of the economy is inefficient. The most efficient part of the economy is the small business private sector. This also is the sector which produces the most jobs. The best way to get that money in the hands of the vast majority of workers and consumers is through large payroll tax cuts, income tax cuts and capital gains tax cuts. This should have been the focus of the stimulus package. Instead the politicians targeted the funds to government, public employee unions including public schools and other private sector union jobs. This is the least efficient part of the economy. These types of jobs should only be expanded when the private sector is in a strong economic cycle. During a recession government related jobs should be decreased so taxes can be decreased. A substantial decrease in taxes will really spur the economy.
—John Rynne, president, Rynne, Murphy & Associates, Inc.
A "stimulus bill" was necessary, given the circumstances, in order to create demand as consumer confidence waned. The actual bill, however, did much less than it could have by becoming a political piggy bank with little focus on stimulating the economy back to a market-driven economy where consumers define demand by what they buy and how much they’re willing to pay. Another way to look at it, if you’re a shrewd investor, would you rather give the money to the people to invest or to Nancy Pelosi and Barney Frank? Where do we get the more bang for the buck? Obama made a major mistake in not taking the lead on defining where the stimulus money was going, but turned it over to the political hacks. And we’ll be paying the price now for years to come.
—Robert J. Tuite
That large amount of money will have an impact, but most of the money has not been spent yet. The bill was written so that most of the money from the stimulus bill will be spent in the months leading up to the midterm elections in order to boost confidence in the incumbent party just in time. In the long term the amount of debt and the cost of the debt incurred from this "stimulus" will far outweigh any small initial gains.
My guess is that without it unemployment rates would have been higher. I also think it’s too early to rate the stimulus program as positive or negative.
$120 Trillion in unfunded liabilities…you tell me.
Where was the money spent? There will be too many negative effects of this to deal with for many years to come—increasing taxes, health care, energy, inflation costs, state governments collapsing and not cutting costs, etc. Same old crap, another year.
It has started very slowly in the U.S. We do see more business activity in Latin America, the Middle East and Asia.
—Sergio Ruffolo, JR Language Translations
(c) 2010 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or e-mail firstname.lastname@example.org.