Friends

I am attaching a recent article from Reuters (Tue Aug 24) about the impact of Stimulus (Recovery Act). As usual I precede it by a commentary.   This is one of several articles that I intend to sent out about the Recovery Act that present the facts about one of the major Accomplishments of the Administration and the Democratic Congress.  

There has been so much distortion, misinformation and frankly outright lies by Fox News and even the mainstream Media that the majority of the American people have come to believe that the Stimulus has been a failure and a waste of tax payer dollars.   Naturally the slow pace of the recovery and the persistent high unemployment rate have not helped the cause.   It seems that we lost the Message War in the eyes of the public opinion about this, I know many Democrats who have their doubts about the impact of the Stimulus and have not felt its direct impact in their lives in a significant way.  Hopefully, the President, the DNC, and the Democratic Candidates will  publicize some of the successes of the Recovery Act during the last two months of the 2010 Campaign !!!

Successes such as the cash for clunkers program, the return to profitability of GM and Chrysler, the assistance to the States (both the one in the original Recovery Act and the additional recent $26 billion  to retain teacher and first responder jobs and extend Medicare for seniors), the tax credits for first-time home buyers, tax credits and tax cuts for lower and middle class Americans, extension of unemployment benefits till Nov 2010 can not be denied. 

Overall, this is difficult issue to present with a lot of details about the economy and its inner workings.   Therefore,  I will try to parcel it to several pieces each with a distinct focus and sent it out piecemeal.  Hopefully,  I will not abuse your patience. Today's commentary is introductory,  it only describes the components of the Stimulus and provides a broad overview of its impact.   Then the attached article fills some of the numbers about the overall impact.

The Components of the Stimulus (Recovery Act)

Frankly 1/3 of the stimulus ($ 280 billion) was tax cuts and tax credits for lower and middle class Americans.   Though it was helpful, the ditch that Bush and the GOP took us in during their 8 years was too deep and too wide to be sufficient in itself to stimulate the economy significantly; it did provide some relief and it puts to shame the GOP argument that under Pres Obama, taxes have gone up.  In reality, the Fed taxes for the lower class and the middle class were reduced and together with tax credits for first time home buyers, cash for clunkers, tax credits for refitting houses so that they are energy efficient, and help with refinancing loans and avoiding bank foreclosures improved the lot for many Americans who have been under pressure from the current recession.

Another 1/3 ($290 billion) was slated for help to the economically ailing States so that Medicare, Medicaid and all kinds of service programs provided by the States remain funded and to retain the jobs of those working in the state and municipal administrations and services so that continue to serve their communities.   To this add the original funds for extending unemployment benefits for 2009 and part of 2010 till the additional recent extension ($32 billion) that will assist working Americans till Nov 2010.  Without the above the current recession that resulted from 8 years of Bush failed economic policies and the 2008 Wall St meltdown will have forced the States to lay millions more of teachers, policemen, firefighters, state employees, municipal employees and other types of personnel that serve the people in every State.  Moreover, $ 100 billion or so went to cover the shortfalls for Medicare and Medicaid so that our seniors still get the help they need.

The last 1/3 of the stimulus ($290 billion) was the part that is currently working to stimulate the economy directly though investments in infrastructure (road, bridge and highway repair, as well as shovel ready projects all over across the country), clean energy (solar, wind, batteries for electric cars, electric cars, clean coal, bio-fuels, nuclear waste storage), high speed trains, expansion of High Speed Internet connections over the countryside, nationwide power grid, and direct investment in innovative information and medical technologies  (for efficient data processing, creating national database for health care) and others.  

Several eminent progressive economists (like Paul Krugman, prof at Princeton, Nobel Prize in Economics) from the beginning criticized the size of this portion of the Stimulus.  They sensed how deep and wide the hole in the economy was after the Collapse of 2008 and suggested that this portion of the Stimulus should be two or three times larger !!!   Unfortunately Conservative Democrats and the 3 GOP Senators: Specter (then GOP of PA) , Collins and Snow (of Maine), who supported it, requested the inclusion of tax cuts and the reduction of its size.   At the time the President thought that he should pursue bipartisan support for the legislation.  The compromise that followed  shaped the Stimulus to the size and intent described above.  In truth this was a wasted opportunity, the Stimulus (the last portion) should have been considerably larger and help put people back to work.   The GOP never believed in bipartisanship and never intended to provide any support to the Obama Agenda; from the beginning they decided to oppose any positive measures so that the economy deteriorates and they can come back to power.

66 Days Left to Nov 2 !!!  Keep Fighting !!! Support the Democratic Candidates !!!

Evan Geraniotis

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Stimulus added millions of jobs in Q2