Stimulus Package: "Take The Money And Run!"

So this week there's been some pretty historical developments. The Stimulus Package (a.k.a. The Flagship of Obama's platform) has been passed by both houses of Congress. This is a big deal! But before it was passed, many economists took the liberty of predicting the outcome of said package. They looked at all of the provisions outlined in the package and made prognostications on the outcomes they would have on the economy. Now that the Stimulus Package is passed, the states are facing the ironic challenge of spending their money.

Early this week on Feb. 13, an article was published containing economists' predictions on the out come of the Stimulus Package.

But at the end of the day, the economists concluded that
anything pumping money into the economy will help in the near term.
“Most
economists say that [the stimulus] is so big it will have to do some good. It
will generate some GDP growth,” said U.S. Chamber of Commerce chief economist
Martin Regalia

.

I agree, $787 billion is so much money that some good has to come from it. That much money has to go somewhere. As part of the Stimulus Package, $150 billion dollars is being allocated to infrastructure. That means that new roads are going to be built, current roads are going to be repaired, and alternate modes of transportation such as railroads are going to be expanded. This is great news! Many of the roads built nearly 50 years ago are in desperate need of repair in order to sustain the increasing volumes of traffic. Not only are we going to see where the money is going, but those roads aren't going to build themselves. This means hiring more workers, American workers, to build them. This bottom up approach is going to work. As more workers are hired, they'll be able to use the wages they didn't have before to not only buy food and clothes for their families, but to also buy new flat screen TVs, refrigerators and other goods that they may have been holding back on as a response to the downturn in the economy. These "long term" goods are a great indicator of how the economy is doing. When the economy is good, people buy these goods more often. But when it's bad, since these goods can be made to last, consumers tend to deal with older merchandise in order to allocate their money to "short term" goods such as clothes and gas for work.

However, these predictions really don't matter now that the stimulus bill has been passed. As of February 16 the bill is as good as through. However, there was very little bipartisan support. No Republicans in the House approved the bill and only three Republicans in the Senate voted in its favor. Many Republicans feel that this package is less about saving the economy and more about using the Democratic Majority to push Democratic policy. They feel that there is too much government spending and not enough tax cuts. However, this battle has been long before the Stimulus Package came into play. Nonetheless, this is a major victory for Obama. To have a something this big passed so quickly is astounding. However, Obama says this is just the first step towards fixing the economy and not an instant fix--Which is understandable. No one can expect the economy to make a sudden turn around. As I've said before, this Stimulus Package is not magic. In fact, I wouldn't expect to see any significant difference until the end of Obama's first term.

Now that the Stimulus Package is passed, many states are having trouble figuring out what to spend it on. The problem lies in deciding where to allocate the money left after carrying out the projects required by Congress. As I mentioned earlier, $150 billion dollars must be allocated to infrastructure. Also, Congress is requiring states to prioritize projects that it deems most necessary.

"The law also requires that half the money be spent on projects
that have been vetted by the federal government and deemed "ready to go" in 120
days, as a way to jolt the economy and create jobs. That means state officials
are under pressure to make decisions quickly on which projects to fund and which
to bypass.
While many states have made their lists of "ready-to-go"
infrastructure projects available online for public review, others have
resisted, in part because the limited stimulus funding means only a fraction of
the projects will receive money. Watchdog groups say it's likely that state
officials fear angering constituents if a project appears on a wish list and
then is struck from the final allocation."

I don't know about you, but I'm glad that Congress is using some oversight in the spending of this money. $787 billion is an insane amount of money that, by borrowing, puts us in a debt that my children will still be paying! I want every single penny of that to go to projects that will help the economy instead of pet projects of politicians or in the pockets of greedy executives. It shows major responsibility on Congress's part to at least partially oversee the spending of this money. That being said, many states are being very careful in allocating the money. Because very few states have outlined specific projects that have previously prioritized, many states are appointing third party officials to take care of the issues while others are having fierce legislative battles to determine where every cent is going. So the states get kudos as well. It would be a very bad thing if those states without prior plans where overpowered by one party.

The next few years are going to be very exciting times where very important decisions are going to be made. The Stimulus Package was the first and the States' allocation of this money is the second.