Some thoughts on the Obama Stimulus Package
This was hard to put together because the charts were PDF so please excuse the appearance.
The report, The Job Impact of the American Recovery and Investment Plan, has been released as a PDF file and the link to it can be here. The report contains a table that shows how their estimate of how the recovery will work. One thing to note is that the composition of the jobs is such as to provide employment at the lowest-paid level (in service industry jobs) as well as for skilled professionals. See below the Krugmann commentary:
Even though Obama has yet to take office, there is considerable unease about his economic program. As Jacob Heilbrunn writes in today's Huffington Post, the response of the Senate's leadership to his presidency is troubling:
Something has gone deeply awry when Obama has to threaten to issue a veto on Tuesday to Democrats, warning that he will not allow them to prevent him from using another $350 billion in bailout funds. It's amazing that the Democrats, who rolled over for George W. Bush for much of eight years, including passing his prohibitively costly tax cuts early in his first term, have now suddenly found the courage to oppose a president who comes from their own ranks.
Envy? Bitterness? Whatever the reason, it's a PR disaster as well as an ominous portent for future relations with the Obama administration. It would be a sad irony if some leading conservative intellectual Obamacons, disgusted with the turn that the GOP took in the past election, turned out to be more sympathetic to the president-elect than his own party.
Paul Kruggman has responded to the President-elect's statement that he wants to hear ideas about “how to spend money efficiently and effectively to jump-start the economy.” Krugmann, like many other progressive bloggers, is concerned that the package is to small to do the job. In his discussion, he references the Romer and Bernstein report on the probably impact of Obama's plan. I will include some of their conclusions following a few excerpts from Krugmann's opinion-piece:
First, Mr. Obama should scrap his proposal for $150 billion in business tax cuts, which would do little to help the economy. Ideally he’d scrap the proposed $150 billion payroll tax cut as well, though I’m aware that it was a campaign promise.
Money not squandered on ineffective tax cuts could be used to provide further relief to Americans in distress — enhanced unemployment benefits, expanded Medicaid and more. And why not get an early start on the insurance subsidies — probably running at $100 billion or more per year — that will be essential if we’re going to achieve universal health care?
Right now the investment portion of the Obama plan is limited by a shortage of “shovel ready” projects, projects ready to go on short notice. A lot more investment can be under way by late 2010 or 2011 if Mr. Obama gives the go-ahead now — but if he waits too long before deciding, that window of opportunity will be gone.
Now, economic forecasting is an inexact science, to say the least, and things could turn out better than the report predicts. But they could also turn out worse. The report itself acknowledges that “some private forecasters anticipate unemployment rates as high as 11 percent in the absence of action.” And I’m with Lawrence Summers, another member of the Obama economic team, who recently declared, “In this crisis, doing too little poses a greater threat than doing too much.” Unfortunately, that principle isn’t reflected in the current plan.
Clearly the kind of dialogue initiated by Obama is going to be important in the future. While Nobel-winner Krugmann is more like to win Obama's ear than progressive bloggers, I believe that the current debate among progressives about the programs needed to turn the country around is important. One very positive feature of the incoming Administration is precisely the release of the Romer-Bernstein document. That kind of transparency in government represents a signficant change. The deeper and more informed the public debate of these all-important policies is going to be crucial to Obama's getting the support he needs to face down an entrenched , if increasingly unpopular, Republican opposition.
Effects of the Components of the Recovery Package on Jobs in 2010Q4
Manufacturing – Total 408,000
Wholesale Trade 158,000
Retail Trade 604,000
Financial Activities 214,000
Professional and Business Services 345,000
Component Total Effect Direct Effect Indirect Effect
Energy 459,000 305,000 153,000
Infrastructure 377,000 236,000 142,000
Health Care 244,000 166,000 78,000
Education 250,000 166,000 83,000
Protecting Vulnerable 549,000 140,000 409,000
State Relief 821,000 442,000 379,000
Making Work Pay 505,000 0 505,000
Business Tax 470,000 0 470,000
All Components 3,675,000 1,456,000 2,219,000