So how did “stimulus’’ become a dirty word? With unemployment still stuck at nearly 10 percent, it’s no surprise that most voters are sour about President Obama’s $800 billion program of tax cuts and spending projects enacted early last year. But that doesn’t begin to explain the upside-down political impact of all that money in the last weeks before midterm elections.
In Ohio, Wisconsin, California and Florida, Republican candidates for governor and for Congress are vowing to stop billions of dollars worth of high-visibility high-speed rail projects. The Republican nominee for governor in Wisconsin, Scott Walker, has created a website called “www.NoTrain.com” to denounce an $800 million federal grant for a train between Milwaukee and Madison.
Republican gubernatorial candidate John Kasich of Ohio is vowing to block a $400 million stimulus grant for a 255-mile passenger rail line between Columbus, Cincinnati and Cleveland. Republicans in the general assembly ridicule the “3C” project as “snail rail.’’ Similar battles are playing out in California, New Jersey and Florida, with Republicans competing for the chance to turn away money from Washington. Just yesterday, Republican New Jersey Gov. Chris Christie terminated a planned $8.7 billion tunnel between his state and New York, $3 billion of which was to be funded by the federal government.
More broadly, Republicans and conservative political groups are pouring millions of dollars into television ads that attack Democrats for the “failed stimulus,’’ the “wasteful stimulus” and “bailouts” for Wall Street and the car industry. Factcheck.org, an independent watchdog group, estimated that more than 130 political ads this year have referred to “stimulus.” Almost all those in the last month or so have used the word as a form of scorn.
An Ohio group backed by the U.S. Chamber of Commerce recently ran an ad against Democrat Rep. Zack Space that showed a burglar breaking into a house. "What would it feel like if someone broke into your home?" The narrator asks. “Zack Space voted for [House Speaker] Nancy Pelosi's budgets and debt, for job-killing energy taxes, and for her wasteful stimulus. And we still lost more than 2.5 million jobs. With Pelosi and Space's agenda, it can feel like you're getting robbed.”
The Stimulus: Too Small?
As it happens, scores of independent analysts estimate that the stimulus law — officially known as the American Recovery and Reinvestment Act — saved as many as 3 million jobs and prevented a much worse downturn. The nonpartisan Congressional Budget Office estimates that the program saved or created between 1.4 million and 3.3 million jobs. That estimate is in line with private forecasters at Goldman Sachs, Macroeconomic Advisers, Moody’s and other firms. Many analysts have argued for months that the stimulus was too small and that Congress needs to approve another round.
“The Great Recession may have ended a year ago, but until a full expansion gets underway policymakers will still need to support the economy,’’ wrote Augustine Faucher of Moody’s Analytics in a recent report. But validation from economists isn’t helping Democrats on the campaign trail. In a Washington Post poll published this week, 68 percent of respondents said they thought President Obama’s stimulus program had been a waste of money while only 29 percent thought the money was well spent. In the September poll by Rasmussen Reports, only 34 percent of respondents thought the stimulus had helped while 39 percent thought it had hurt the economy.
Sources of Disapproval
The unpopularity of the stimulus program — officially the American Recovery and Reinvestment Act — stems in part from missteps by the Obama administration and in part from its design. White House economists predicted in early 2009 that the package would keep unemployment below 8 percent, but they greatly underestimated how badly the economy had already been damaged. Even though job losses slowed and then stopped after the stimulus bill passed Congress, unemployment shot well above 9 percent, and nearly half of all unemployed workers have been jobless for more than six months. Hundreds of thousands of additional people simply dropped out of the workforce or settled for part-time work. Adding to the perception of failure, falling home prices have continued to reduce most homeowners’ wealth.
Republicans who voted almost unanimously against the stimulus bill in Congress have hammered Democrats with accusations that the stimulus did nothing except increase the federal debt. A new television ad by Rob Portman, the Republican candidate for Ohio’s open Senate seat, portrays despondent jobless workers in a black-and-white video as a funereal soundtrack plays in the background. It then singles out the stimulus to attack the Democratic rival, Lt. Gov. Lee Fisher. “Lee Fisher supported the $800 billion stimulus,” declares a woman narrator. “Since then, Ohio has lost nearly $150,000 jobs. Lee Fisher wants a promotion. Isn’t it time for a change?”
Republican Alternatives Unclear
Republicans have been vague about what they would do in place of the stimulus. Most say they would “reduce uncertainty” by extending all the expiring Bush tax cuts, blocking Democratic bills to impose new limits on fossil fuels and repealing the new health care law. Vulnerable Democrats are nervous. When President Obama proposed tax cuts for business and a $50 billion infrastructure bank in September, Congressional Democrats kept a polite distance. And the last few weeks, a growing number of Democrats have tried to change the subject from their own record on job creation to warnings about Republican plans for job destruction.
“We’ve lost 91,000 jobs to China,” a narrator says ominously in a new ad unveiled by Rep. Space in Ohio on Tuesday [Oct. 5] against his Republican challenger. “Bob Gibbs wants more free trade with China, so he can increase their standard of living … Free-trading, job-killing Bob Gibbs.”
Another vulnerable Ohio Democrat, freshman Rep. Mary Jo Kilroy, makes no apologies for supporting the stimulus bill. But like many other Democrats, Kilroy avoids the word “stimulus’’ and talks about bills that “inject growth into the economy.” To defuse GOP allegations about big spending and record deficits, Kilroy often pairs her defense of the stimulus with a call to “rein in reckless spending.”
A few at-risk Democrats aggressively defend their support for the program. Rep. Joe Sestak of Pennsylvania, who faces an uphill race for Senate against Republican Pat Toomey, came out swinging after a Toomey ad in August accused him of supporting “a stimulus that gave us record debt without creating jobs.”
Sestak quickly fired back, not once but repeatedly. “My opponent has attacked the steps we took to clean up the mess he left behind,’’ he said in a speech a few days after it ran. “They were tough votes; but the right votes. That’s what leadership is. It’s what I learned as a sailor, and it’s why I went to Congress in the first place — to do what’s right, regardless of the political consequences.”
Unfortunately for most Democrats, voters can’t feel the results themselves. One big chunk of the stimulus — the Making Work Pay tax cuts of $400 per person — was spread out over two years in the form of lower withholdings on payroll taxes. Even if people spent all their extra cash, as the government wanted, few were likely cheered by the slight blip in their paychecks.
Other big chunks of money went to shore up state Medicaid programs, which provide insurance to low-income families, and to prevent state layoffs of teachers, police and other employees. Those efforts all helped states and municipalities avoid major layoffs, either directly or indirectly, and thus promoted economic activity. But they hardly felt like a boost to ordinary voters.
For most people, the only tangible evidence of the stimulus program’s accomplishments has been big-ticket infrastructure projects close to home. But those projects — new bridges, highways and rail projects — take time to get started. And as Democrats in states like Ohio and Wisconsin learned to their dismay, opposition politicians are more than willing to look a gift horse in the mouth.