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Minnesota congressional races highlight debate over stimulus law

WASHINGTON — Democrats and Republicans are locked in a battle over the definition of the word “spent,” and how to count job creation, all in an effort to convince voters about the merits of the stimulus law.

The White House says the stimulus is on track to create or save 3.5 million jobs by the end of the year, shaving at least two percentage points off the unemployment rate in the process, and putting tens of thousands of teachers, police officers and firefighters back on duty.

Republicans, in turn, point to the White House’s own initial estimate that passing the stimulus would keep the unemployment rate under 8 percent — it actually topped 10 percent has since fallen to 9.6 percent. The GOP is so convinced that the $787 billion bill was a waste that they have made ending the stimulus a plank of their platform as they attempt to retake the House.

Whether or not the stimulus has been effective is a key point of contention in many races this fall. In thes 1st District, GOP challenger Randy Demmer calls it a “failed” policy while in the 6th District Democratic challenger Tarryl Clark has hit Rep. Michele Bachmann over her opposition to the stimulus and some public safety jobs it funded.

The White House dismissed polling that shows deep skepticism on the stimulus — like a July CBS News study in which 56 percent of respondents said the thing didn’t work while a further 18 percent said it actually made things worse. Poll deeper, administration officials say, and you’ll find “stratospheric” support for segments of the stimulus like tax cuts, unemployment assistance and increased funding for hiring and retaining teachers.

More importantly, White House spokesman Robert Gibbs said Friday, it was the right decision.

“Sometimes doing what’s right with the economy doesn’t poll well,” Gibbs told reporters in a special briefing. “My hunch is it wouldn’t poll well if we were in a Great Depression.”

Jobs and the politics of repeal

Only about a third of the jobs the administration says have been created or saved can be directly counted. Those are the construction workers working on repairing a road, or teachers who would have been laid off by cash-strapped states but ultimately weren’t.

The rest are indirect jobs — the cook at the Taco Bell where the construction worker goes to lunch, or the Realtor who sold the teacher his new house. It’s a nearly impossible chore to count every single one of them, so instead officials rely on economic formulas to calculate impact.

The administration’s job figures are based on an August report from the non-partisan Congressional Budget Office. But as the Associated Press noted, the administration’s 3.3 million jobs created or saved at this moment is a figure at the high edge of the CBO’s estimate range.

According to the same report, the stimulus could also only be responsible for 1.4 million jobs, which would leave the White House impossibly short of its 3.5 million jobs goal by year’s end.

There are figures that aren’t in dispute: If the stimulus stopped today, an estimated two million families would see their taxes go up by an average of $200 a year, while threatening more than 400 transportation, rural water, waste and clean energy projects planned and funded or already in progress.

Rep. Jim Oberstar, head of the Transportation and Infrastructure Committee, doesn’t mince words when talking about the $677 million allocated to transportation and transit stimulus projects in Minnesota, or the 23,000 jobs he says it created or saved.

“Each of those jobs represents a pay check instead of an unemployment check,” Oberstar said. “It helped families make house payments and buy groceries and, when the work is complete, Minnesota will have better roads and bridges to move goods and services more efficiently.”

“There’s a practical impact as well in what you’re seeing that Republicans proposed in their pledge,” Gibbs told reporters Friday. “ It guarantees rolling back what is left to be spent in the Recovery Act will stop important projects dead in their tracks, like clean energy projects.  It will stop tax relief for 110 million Americans.  And for folks that talk about not wanting to raise taxes, that’s exactly what that pledge would do and make some — make some tough cuts in programs like education that we know are so incredibly vital for preparing the students of today for the jobs of tomorrow.”

Gibbs was referring to the House GOP’s Pledge to America, in which Republicans say they’d repeal the remaining unspent stimulus money, an amount they say totals more than $100 billion.

It’s right there on page 14.

The trillion-dollar ‘stimulus’ spending bill has made “where are the jobs?” a national rallying cry after failing to live up to the specific promises made by its architects. Instead of remaining below eight percent, unemployment has been above nine percent for 16 consecutive months. This is a far cry from the recovery the American people were promised.

And on page 23:

There is no reason to wait to reduce wasteful and unnecessary spending. Congress should move immediately to cancel unspent “stimulus” funds, and block any attempts to extend the timeline for spending “stimulus” funds. Throwing more money at a stimulus plan that is not working only wastes taxpayer money and puts us further in debt.

But that figure — more than $100 million — was cast in doubt by the White House Friday, as officials said canceling the stimulus in a way that wouldn’t get the federal government sued would leave recover just $18 million.

Defining the word ‘spent’

So just how much stimulus money has been spent and how much is left over?

Believe it or not, the answer to this question depends on your definition of the word “spent.”

Say you have $1,000 in the bank. You pay cash for a new television that cost $500. Then you see a neat Blu-ray DVD player on sale for $150 and a Playstation 3 for $300 — but they’re the last ones Best Buy has in the store.

So you tell the store manager you want to buy them but don’t have the cash now. “No problem,” she says, “Let’s just write a contract that says you’ll buy the DVD player and PS3, pick them up tomorrow and pay when you pick them up.”

As you walk out of the store, how much money have you spent?

The White House would say you’ve got $50 left unspent. Republicans in Congress would contend you’ve got $500 left, because you haven’t yet outlaid the $450 you’re contracted to pay for.

It’s the same with the stimulus. Now bear with me here, because this is about to get really mathy.

Of the total $787 billion allocated to the stimulus, some $551 billion has already been spent, in the form of tax breaks ($243 billion) and outlays ($308 billion). $5 billion was rescinded.

That leaves roughly $233 billion left that’s not already money out the door — though White House officials said much of it has already been obligated for something. Of that amount, $126 billion is contracted project spending, where contracts for work have already been signed but checks aren’t yet in the mail. A further $46 billion is estimated as the amount of tax relief remaining to be funded.

This next bit is slightly fungible. Some $42 billion is set aside for mandated spending on things like food stamps, unemployment and Medicaid. That number could be quite a bit more or less because one doesn’t know precisely how many people will need the safety nets and there’s no hard cap on how much the government can spend there. Put another way, the government isn’t going to say no if you get laid off and need unemployment, even if your specific check would put them over that $42 billion mark.

In fairness, it doesn’t really matter for these purposes whether that $42 billion number is off, or by how much. The stimulus money is authorized by program; Congress said to run unemployment a certain way and that costs what it costs.

All of that leaves us with roughly $18 billion in unobligated project spending. It’s designated mostly for high speed rail, clean energy and a few assorted other programs, but it hasn’t been contracted yet.

Put another way, if you wanted to scrap the stimulus entirely and halt everything that hasn’t already been spent or contracted, White House auditors say you’d have about $18 billion to play with.

White House spokesman Robert Gibbs countered Friday that such a move would be irresponsible — and that the savings the GOP is counting on couldn’t be realized without stopping construction projects halfway to completion and exposing the federal government to lawsuits from companies who have signed contracts for work yet to begin.

But administration officials also admitted in some of the most candid language yet to date that they could have done a better job selling the merits of the bill to a skeptical public.

Officials were asked if the administration was disappointed by anything with the stimulus, to which Ed DeSeve, senior adviser to the president for Recovery Act implementation, replied, “If we were disappointed about anything, it’s our inability to get the message out exactly how the American public want to hear about it.”

They’ve got one month left to fix the messaging and convince that skeptical American public that the stimulus was and is a success.

If things stay the way they are, polls show a skeptical public increasingly willing to give the GOP a chance to try something different.

Comments (16)

  1. Submitted by Richard Schulze on 10/04/2010 - 06:41 am.

    I think what we need to do is create jobs. Why hasn’t anyone tried to create jobs? If Republicans were in office, their Leadership would result in More Jobs!

    And lower taxes! Why don’t we pay less in tax? Hard working Americans need to keep more of their money, not have the Democratic government confiscate it and waste it on programs that hurt America!

    And the Deficit! Why has no one tried to balance the budget and pay down our debt? Democrats are fiscally irresponsible, that’s why! They can’t be trusted to do anything but spend, spend, spend! And raise taxes! And destroy jobs and everything America stands for!

    We need Republicans in office to lower taxes, pay off the debt, preserve American values, and create jobs and economic growth!

    And unicorns! And leprechauns! And pots of gold! Why is there no pot of gold? Democrats hate Americans, that’s why! If there was Republican leadership there would be pots full of gold for every hard working Real American® family!

    That’s why you need to Vote Republican in November! Pots of gold, tax cuts, unicorns, job growth, and fiscal responsibility! Just like every other time we’ve had Republican leadership!

  2. Submitted by Thomas Swift on 10/04/2010 - 09:14 am.

    Go ahead and give the Democrats their pie-in-the sky 3.5 million jobs.

    Now divide that into the $787 Billion they borrowed from the Chinese; yeah, now you’ve got the picture.

  3. Submitted by Greg Kapphahn on 10/04/2010 - 10:00 am.

    The deeper philosophical problem for our Republican friends (the current crop, that is, not the older, more mature, more intelligent, more emotionally-stable ones whom today’s crop have driven out of the party),…

    The deeper problem today’s Republicans have with the “stimulus” is that it’s geared to help REGULAR people. WE SIMPLY CAN’T HAVE THAT!

    EVERYONE knows, that the most important function of the government is NOT to help regular people, it’s to give out no-bid crony contracts (especially in national defense), and provide tax cuts and loopholes which further enrich the already fabulously wealthy.

    In the eyes of today’s Republicans, the problem in America today is not economic stagnation or a jobless recovery (for the poor and middle class), it’s that the rich are simply not getting richer fast enough!

    There simply MUST be more ways and more creative ways for the rich to strip the few assets remaining in the hands of the poor and middle class! It is the government’s job to find those ways and restructure the economy and the tax system to assist the rich in using them.

    The Republican project will not be complete and the rich have everything and the poor have nothing worldwide. Then they can retire to their gated communities with their private security guards (in the US or off shore), and settle back with the sure knowledge that God’s in his heaven and everything is right with the world.

  4. Submitted by Richard Schulze on 10/04/2010 - 10:16 am.

    Tom Says: “They borrowed from the Chinese”
    Is this phenomena of borrowing from the Chinese something that’s been happening recently Tom? Or have the Chinese in fact been responsible for “financing” our two recent war efforts for the past ten years or so?

    Truth is only good with his best friend context.

  5. Submitted by JA Laughlin on 10/04/2010 - 12:24 pm.

    Mr. Swift: I’m with Mr. Schulze on this–and here is a link to the Treasury Department website which supports it. When G.W. Bush took office in January 2001, the Chinese held $61.5 billion in US Treasury Securities—by the time Mr. Bush left in January 2009, that figure had increased to $739 billion.

    In fact, it was during Mr. Bush’s last year in office that the Chinese became the largest holders of US debt when they went from holding $492 billion in January 2008 to holding $740 billion in January 2009–almost a 50% increase in only one year.

  6. Submitted by Thomas Swift on 10/04/2010 - 12:44 pm.

    You’re both right. Congress has been borrowing from the Chinese for years….why stop now?

    They’ve got to have a few hundred billion left laying around, and if we don’t spend it, who will?

  7. Submitted by Bernice Vetsch on 10/04/2010 - 01:46 pm.

    Wonder why Republicans who are calling for extending Bush’s tax cuts for the wealthy (which account for about half the budget deficit he created each year, and his wars for the other half) are not asking the 2% most wealthy Americans this question:

    Hey. We’ve been calling you the “risk takers” and “job creators” and gave you untold billions of dollars in tax reductions to create jobs. It’s embarrassing not to be able to point at millions of new jobs and say, “See; we really do know how to grow employment.”

    Quickly tell us. Where are they???

  8. Submitted by Richard Schulze on 10/04/2010 - 02:33 pm.

    It’s just really amazing to me that neither party has laid out a deficit reduction plan in an election in which voters say the deficit is a top concern. Letting the tax cuts for people earning $250,000 a year expire cuts the deficit by $70 billion a year for 10 years – nice, but not nearly good enough. The Republicans’ much heralded pledge of a “$100 billion decrease in non-defense discretionary spending” means little given the lack of specifics and then means absolutely nothing at all given the Republicans’ goal of extending all tax cuts and no doubt increasing defense spending, meaning that at best the net deficit reduction is more or less the same as the Democrats’ limited tax increase.

  9. Submitted by Dennis Tester on 10/04/2010 - 02:54 pm.

    “[we] … gave you untold billions of dollars in tax reductions to create jobs.”

    Your problem, Bernice, is you want credit for giving people back they’re own money.

    You confiscated that money in the first place and like a mugger who lets the victim keep his watch, you want credit for your act of kindness and even debit your bank account for the watch that would otherwise be yours.

  10. Submitted by Steve Rose on 10/04/2010 - 02:55 pm.

    Greg (#3):
    Thanks for banging the class warfare drum. That’s usually effective, but probably not this time.

    Here is part of a comment I made regarding the September 14th Community Voices regarding the Cash for Clunkers stimulus “success”:

    The CARS report to Congress uses a calculation that they credit to the Council of Economic Advisers. The EAC estimates that $92,000 of direct government spending creates one job-year. If you do the math, with the $3 billion spent, the quotient is about 31,000 jobs. The report goes on to explain that they annualized the jobs over the third and fourth quarter of 2009, to double the number to 62,000 jobs. If they had only thought to annualize the spending over the third quarter only, they could have created 124,000 jobs. It seems, the faster you spend it, the more jobs you create. Sadly, you can’t make this stuff up; you have to read it from a government report.

    House Ways and Means ranking member Dave Camp (R-Mich.) released data in August, compiled by his office, that shows 48 of 50 states have lost jobs since the February 2009 the economic stimulus bill was enacted. Camp’s office stated, “To date, 2.6 million jobs, including 2.5 million private sector jobs, have been lost.”

  11. Submitted by Glenn Mesaros on 10/04/2010 - 03:09 pm.

    What did FDR, for whom Ronald Reagan voted four times, do to stimulate the economy? He created the CCC for youth, who used their new training and education to become skilled technicians during and after WWII. He created the TVA, which took the Third World SE USA, and jump started an industrial revolution, vectored by nuclear power. Mini TVA’s rose up in the West, such as the Hoover Dam and Bonneville Dam, which created the aluminum industry to win WWII with airpower. What did Kennedy do to stimulate the economy – he created Nasa and used the Moon shot to create $10 private industry dollars worth of new industry for each federal dollar invested. What did Barack “President Pothole” Obama do: he shut down the Nasa Constellation program, counterposed “energy efficiency” to nuclear fusion power. He dissipated $8 billion on high speed rail, while China and Europe spend hundreds of billions to build a 21st century economy. What should we do? Join with the Russians to build a tunnel under the Bering Straits, and link up Eurasia with Alaska with high speed freight and passenger rail, while building another TVA (Nawapa) to divert the Yukon River in Alaska to the parched western United States.

  12. Submitted by Richard Schulze on 10/04/2010 - 04:55 pm.

    Most of the problems facing America will require solutions—whether it be increasing the retirement age, cutting Medicare, or raising taxes—that cause real pain. Eventually, one of the parties will have to inflict it.

  13. Submitted by Steve Rose on 10/04/2010 - 05:45 pm.


    You failed to mention the Kennedy tax cut, which stimulated the economy.

  14. Submitted by Thomas Swift on 10/05/2010 - 09:52 am.

    Richard, you’re right; something has to give.

    Republicans have been saying that for the past 15 years, and the Democrat party has taken the opportunity to throw mud every time.

    But I think that is about to change.

    Leftists are fond of throwing down the smarmy “which socialist program do you want to cut” gauntlet. Conservative new comers, armed with the strength of their convictions are poised to head to Washington next year to pick it up and shoulder the load….can’t happen soon enough.

  15. Submitted by Bernice Vetsch on 10/06/2010 - 11:09 am.

    Glen: I’d add to Mr. Rose’s comment that the Kennedy tax cuts stimulated the economy.

    The reason was that Kennedy’s cuts were aimed at the middle and working classes, people who spend more (or most) of their incomes instead of socking any tax cut saving away.

    The billions upon billions of dollars in tax “relief” for billionaires and millionaires has not resulted in a healthier economy with more jobs BUT has helped many of them export jobs to slave-wage/environmental-controls-free countries so they could make ever larger profits.

  16. Submitted by Steve Rose on 10/06/2010 - 01:35 pm.

    Bernice & Glenn:

    The Kennedy tax cut was clearly a tax cut for the rich; the Tax Reform Act of 1964 cut the top marginal tax rate from 90 percent to 70 percent, effective in 1965.

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