The Plum Line Greg Sargent’s blog
Recovery Act – Year One
Talking Points
One year in, the evidence is clear – and growing by the day – that the Recovery Act is working to cushion the greatest economic crisis since the Great Depression and lay a new foundation for economic growth.
· According to the nonpartisan Congressional Budget Office, the Recovery Act is already responsible for as many as 2.4 million jobs through the end of 2009.
· Analysis by the Council of Economic Advisers also found that the Recovery Act is responsible for about 2 million jobs – a figure in line with estimates from private forecasters like IHS Global, Moody’s Economy and even the conservative American Enterprise Institute.
· We recently learned that our economy grew 5.7 percent in the fourth quarter – the largest gain in six years and something many economists say is largely due to the Recovery Act.
· And job losses are a fraction of what they were a year ago before the Recovery Act began.
Since the Recovery Act was signed into law a year ago, we have:
· Cut taxes for 95 percent of working families through the Making Work Pay tax Credit – that’s $37 billion in tax relief for 110 million working families in 2009.
· Made loans to over 42,000 small businesses through the Recovery Act, providing them with nearly $20 billion in much-needed capital.
· Funded over 12,500 transportation construction projects nationwide, ranging from highway construction to airport improvement projects – of which, more than 8,500 are already underway.
· Funded projects at 51 Superfund sites from the National Priority List. Of those sites, 34 already have on-site construction.
· Started more than 2,850 construction and improvement projects at over 350 military facilities nationwide, with more than 950 projects completed.
· Made multi-billion dollar investments in innovation, science and technology that are laying the foundation for our 21st century economy including:
o $2.4 billion in grants to companies and educational institutions in over 20 states to fund 48 new advanced battery and electric drive projects that will help power the next generation of advanced vehicles.
o $3.4 billion in grants to private companies, utilities, manufacturers and cities to fund smart energy grid projects that will support tens of thousands of jobs and benefit consumers in 49 states.
o The first of over $7 billion in awards to bring broadband to communities where there is little or no access – a significant step forward in driving local economic development
o More than $5 billion in grants to fund 12,000 cutting-edge medical research projects at research and educational institutions in every state across the country.
o $8 billion in awards to fund projects that lay a foundation for a high speed rail network here in the U.S. – a move that will not only create jobs and drive economic growth, but jump-start a critical element of our 21st century infrastructure
· Provided critical relief for state governments facing record budget shortfalls, including:
o More than $50 billion to help prevent cuts to Medicaid programs across the country.
o Nearly $60 billion in funding for education – a move that governors say is already responsible for creating and saving over 300,000 education jobs.
But we are just getting started with the Recovery Act – there is even more to come.
· The Recovery Act was designed to spend money gradually over time in order to sustain a true recovery – with peak spending occurring early this year.
· Signature programs that provide some of the biggest employment bang for the buck are in the pipeline. In the coming months, we will begin to put billions of dollars to work:
o Jump-starting some of the most innovative transportation construction projects across the country through competitive TIGER awards.
o Funding some of the most effective education programs across the country through Race to the Top competitive grant awards.
· In fact, we expect outlays for projects overall to double in the first two quarters of this year.
· As the weather begins to thaw, thousands of construction projects funded late last year are expected to break ground across the country.
· And the job impact of Recovery Act projects already underway is in many cases just beginning to be felt.
o While the experts agree the Recovery Act is already responsible for creating or saving around 2 million jobs, about 75 percent of recipients that reported on their Recovery Act spending indicated their projects are less than half complete – meaning there is even more job impact from those dollars to come.
o We remain right on-track to create and save at least 3.5 million jobs by the end of the year.
And the demand for some of the Recovery Act’s most innovative and effective programs – the ones that provide some of the greatest long-term economic bang for the buck – is so great that the Administration has announced proposals to extend or expand them:
· The Vice President recently announced that the Administration will provide an additional $5 billion in 48c tax credits for renewable energy manufacturing projects because of the overwhelming number of quality applications for the initial $2.3 billion provided by the Recovery Act.
Just last month, the President announced plans to seek additional funding in his budget to expand the Race to the Top Program, which was initially funded with $4.35 billion through the Recovery Act last year.
· And the President has also proposed:
· Building on the tax cuts and small business assistance in the Recovery Act with a complete elimination of capital gains taxes on small business investment.
· Building on the Recovery Act’s initial investment in the nation’s infrastructure with additional dollars to continue modernizing our transportation and communications networks.
· Expanding some Recovery Act initiatives to promote energy efficiency and clean energy jobs which have proven particularly popular and effective.
The Recovery Act was never meant to replace dollar for dollar or job for job what we have lost – no single government program ever could.
That’s why the President continues to work every day to find more ways to put people back to work and drive economic growth.
But one year in, experts ranging from private forecasters to governors on both sides of the aisle say the Recovery Act has helped pull us back from the brink of economic disaster and is helping lay a firm foundation for our economic recovery.
WHAT THE EXPERTS ARE SAYING:
CBO, Congress’s nonpartisan research body, said that as many as 2.4 million jobs could be attributed to the Recovery Act. “[Romer] also pointed to private-sector economic analyses estimating that stimulus added between 1 million and 1.6 million jobs and between 1.5 and 3.1 percentage points of GDP growth in the fourth quarter. The Congressional Budget Office attributes between 800,000 to 2.4 million jobs and 1.2 to 3.1 percentage points of economic growth to stimulus.” [CNNMoney.com, 1/13/10]
Economic columnist David Leonhardt wrote that “a big part” of recent improvements in employment is “the stimulus bill passed last year” and said that “all the well-known private economic research firms estimate it’s had a huge impact.” Over the last three months, the economy has lost an average of 35,000 jobs. That’s the best number since early 2008. And it’s down from a peak of more than 700,000 early last year…. Why? Some of it is the natural rhythms of the economy, but a big part of it is the stimulus bill passed last year. All the well-known private economic research firms estimate that it’s had a huge impact. IHS Global Insight, for instance, says the economy has about 1.7 million more jobs today than it would have had without the stimulus.
Mark Zandi, chief economist of Moody’s Economy.com says the Recovery Act is “contributing to ending the recession” and “impacting unemployment.” “The stimulus is doing what it was supposed to do — it is contributing to ending the recession . . . In my view, without the stimulus, G.D.P. would still be negative and unemployment would be firmly over 11 percent. And there are a little over 1.1 million more jobs out there as of October than would have been out there without the stimulus.” [New York Times 11/20/09]
(Bureau of Labor Statistic
