Stimulus Funds Spent, but Where Are Jobs?

Bulk of Stimulus Dollars for Job Creation Still Not Hitting States

BILOXI, Miss., July 20, 2009— -- The ongoing troubled state of the economy was clearly and instantly on display at the annual summer gathering of the non-partisan National Governors Association which is taking place on the Mississippi Gulf Coast this year.

Fewer than half of the nation's 50 governors attended the gathering this year, including the group's chairman, Gov. Ed Rendell, D-Penn.

Before introducing a videotaped message from Rendell, the incoming NGA chairman, Gov. Jim Douglas, R-Vt., opened the first session on Saturday by stating Rendell needed to stay put in Harrisburg to deal with his state's "economic and fiscal crisis."

The appearance of taking a taxpayer-funded trip down to a casino/resort hotel on the gulf coast and how that would play back home was also likely to be weighing on the minds of many governors who chose not to attend the meeting.

The $787 billion federal stimulus package passed in February with a total of three Republican votes was aimed at easing the fiscal and economic dire straits faced by the states. Five months since President Obama signed the bill into law, several governors said the results have been mixed and that it's still too early to measure the full effects of the stimulus.

"Everybody's dealing with these miserable budget decisions and as hard as they are, they'd be worse without the money that comes into operations," said Gov. Deval Patrick, D-Mass., as he pointed to the critical Medicaid and education funding that helped plug state budget holes across the nation.

"We've been able not just to hold public education harmless," Patrick said. "It's at record levels."

The education spending, for example, required by the federal strings attached to the stimulus bill, is precisely what has some governors worried when the money dries up at the end of 2010.

"We wish we had been given more flexibility in how to spend it. We would have spent it a little different," said Gov. Haley Barbour, R-Mo., the hosting governor of the meeting and a potential presidential candidate in 2012. "We still would have spent a lot of money in education. But we would have spent some money so that the cuts in other agencies wouldn't have been as big. That, today, isn't a big deal. What is a big deal is two years from now. We've put education spending on such a high cliff and there's no way we'll be able to keep it there," he said.

Democratic Allies Say Talk of Second Stimulus is Premature

Democratic allies of the Obama White House stuck to the administration's line that it is premature to discuss a possible second stimulus bill to inject into the stubbornly weak economy. Of course, that is in large part due to the fact that there is clearly no political will at the moment for a second stimulus, which makes the debate somewhat moot.

"My hope is that we give the stimulus its chance to work. It's going to take two years for the full effects, but it's been helpful to us," said Gov. Bill Richardson, D-N.M., who President Obama initially tapped to serve as Commerce Secretary before Richardson withdrew his name due to an ongoing ethics investigation in his state.

"Before we start thinking of another stimulus, let the states work out the two years that are needed for the first stimulus package. I'm worried about the deficit and I think we've got to be careful about another stimulus package right now. I think the first stimulus package is working and we should let it run its course," he added.

Patrick, who suggested the stimulus bill may have tilted a bit too heavily towards tax cuts as a needed compromise to win the approval of some moderate Democrats in Congress, said the stimulus is still properly seen as a jobs bill despite the continued substantial monthly job losses dogging the economy and, politically speaking, the White House.

"I think it's too soon to grade the job creation. I know the instinct to do so and I know that's part of the Republican shtick, but I really think it's too soon, practically, to grade the job creation because much of the money for projects has yet to be released," Patrick said.

The Obama administration's public campaign for passage of the stimulus back in February was centered on depicting it as a jobs bill, but the desire to guard against waste and abuse may be causing the slower pace at which some of those transportation dollars, the key component of the jobs-creating portion of the bill, are hitting the states.

"Everybody's trying to balance doing it fast with doing it right. I think we all appreciate given the vote on the stimulus package, one innocent mistake will be exaggerated to discredit the whole program, so everyone wants to be careful," Patrick added.