Mixing $499 billion in spending with $288 billion in tax cuts, the stimulus bill emerged from Congress with components designed as much to attract Democratic and Republican support as for their economic punch. Some elements bore a more playful pedigree. The TIGGER (Transit Investments for Greenhouse Gas and Energy Reduction) program is housed at the Transportation Department, but appeared inspired by Winnie-the-Pooh.
Ironically, the Republicans who earlier this year were complaining that Obama was too gloomy about the economy, now gripe that his unemployment forecasts were too sunny. But it's not only partisan critics who are taking shots. Investor Warren Buffett, a sometimes ally of the president, likens the stimulus to a "half-tablet of Viagra." And left-of-center economists, who from the outset wanted a larger amount of pump-priming, now fear that the political support for doing more will have evaporated by the time it becomes apparent that more is needed.
Stimulus 'just about on track'
Not so fast, say the plan's authors. Larry Summers, director of the National Economic Council, says the stimulus already has contributed to the economy's recent stabilization. And Summers insists unemployment might already have hit 10% if the president hadn't acted. "I think the stimulus is just about on track, progressing about as we expected," he tells USA TODAY.
As of July 3, the administration says, about $217 billion of the stimulus is being felt throughout the economy. That breaks down into: $43 billion in payroll tax relief plus $174.9 billion the government has committed to contracts.
In Boulder, Colo., Blake Jones, president of Namaste Solar, says the stimulus saved about 15 jobs at his small manufacturer. A $3 billion Treasury Department program converted an existing tax credit for solar investments to a direct payment, prompting commercial customers who no longer could benefit from a tax credit to go ahead with projects.
"The outlook was very bleak. … Now we're anticipating not losing business, but we may continue growing," Jones said.
While critics complain that the stimulus has been slow out of the gate, Summers says the administration always planned for the stimulus to work over a two-year period. So far, the modest economic boost from the government coffers has been overwhelmed by other developments. Oil prices have risen from roughly $35 a barrel in February to just under $60 today, draining more than $165 billion from the economy on an annual basis. Partly in response, the July reading of consumers' expectations for the future took its biggest dive since October.
The economy also has deteriorated more sharply than anticipated since January, meaning that the recession's expected 5 million job losses already have hit 6.5 million and are headed higher. The budget problems of state and local governments led to thousands of layoffs, while auto plant shutdowns added to the economy's woes. In June, despite weeks of talk about "green shoots" on the economic horizon, the economy shed an additional 467,000 jobs.
"You definitely need to be patient. There's no way you can expect results as fast as some people expect. It's not like a fast-food breakfast," says John Silvia, chief economist for Wachovia Bank.
Job-creation goal far off