Harry Moroz
Failing the Stimulus
Blaming the failure of some policy initiative or other on politics or Washington or bureaucracy is so commonplace that it is taken for granted. If health care reform fails, of course politics will be to blame. If climate change legislation fails, of course Washington insiders will be at fault. Given the default negotiating position of Republicans - the status quo - the replacement of policy debate with power struggle is almost inevitable.
Criticism of the stimulus package reflects this truism. In interviews I have done over the last several weeks, mayors have consistently identified either - and often both - congressional politics and state politics as serious impediments to quick implementation of the stimulus package. While the mayors feel that the Obama administration listened to their concerns during the formulation of the package - they wanted more aid funneled directly to city governments - they blame "paradigms" and "inertia" for a slowly rolled out stimulus that directs aid to state governments which (understandably) fill their own budget gaps first but in doing so add another layer of bureaucracy to project funding, causing delays and shaving off funds as they proceed.
What is unique about this criticism is that the American Recovery and Reinvestment Act was, obviously, passed. The criticism is not that politics intervened to stop its passage, but that politics has shaped its formulation and its implementation. This has defined the debate about whether the stimulus is working.
For example, in The New Republic Zachary Karabell identifies politics as the primary reason why the United States' stimulus is not working as well as China's. He writes that "applying for and then authorizing the funds has been a bureaucratic nightmare." And he concludes that "Washington...is almost hopeless in its current inefficiency--which helps to explain the mismatch between the goals of the stimulus and the results to date."
Karabell, like many others, focuses primarily on the infrastructure portion of the stimulus spending, referring only in passing to the package's tax cuts. Similarly, ProPublica's stimulus investigation team released a report under the headline "Stimulus Spending Fails to Follow Unemployment, Poverty". But due to unavailable data the report did not analyze the largest elements of the stimulus, such as its tax cuts and increases in Medicaid and unemployment spending.
Gary Burtless of the Brookings Institution very smartly counters an assumption of stimulus failure by focusing on the very programs that Karabell and ProPublica ignore. He finds that household consumption has fallen much less than wages, business profits, and income from interest and dividends. And he reminds us that:
The goal of [the stimulus programs] is not simply to provide a counter-cyclical boost to consumption. An equally important goal is to help offset the income losses experienced by the victims of recession...Most of them live more comfortably and consume more goods and services than would have been possible without the stimulus package.
The focus on the infrastructure and programmatic spending portions of the stimulus - the parts that show least stimulus success - is far from a rightwing tea bagger crusade. Instead, it is a criticism of the federal government's rotten political orientation towards its most vulnerable citizens. In the end, the stimulus package has worked well enough, as Burtless demonstrates, to make life better than it would have been for "victims of the recession". What is disappointing, however, is that the programs in which politicians had and have the most say - infrastructure spending and other grant programs - have once again been exposed to favor political expediency and, yes, inefficiency.
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Posted at 3:00 PM, Aug 06, 2009 in
Stimulus
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