Did the stimulus plan help Georgia? You bet

CAVE SPRING, Ga. — Last week, under a brilliant blue autumn sky, a platoon of Georgia officials broke ground for a brand-new vocational training center for Georgians who are deaf, blind or suffer other disabilities. It will replace a smaller facility, which has been located in this small town near Rome since 1962.

Labor Commissioner Michael Thurmond, who planned the new building, noted the good fortune of a $10 million project in the midst of severe state budget cuts. He called it “miraculous.”

It isn’t. The new center will be constructed with funds from the same deeply unpopular federal government program that has cut taxes, bought groceries and paid college tuition in households around the country for more than a year — the American Recovery and Reinvestment Act, also known as the “stimulus.”

Among the officials grabbing a ceremonial shovel was Eddie Lumsden, the Republican chairman of the Floyd County Commission. While he believes the new Cave Spring Rehabilitation Center will be a “plus for the community,” like most GOP officials, he’s no fan of the Recovery Act.

“The argument was that it was going to do a lot to bring jobs and help business. But our economy here has not rebounded,” he said.

The Recovery Act was no cure-all, but an analysis by two economists has concluded that stimulus programs under the Bush and Obama administrations added about 2.7 million jobs. (In 2008, in response to the sluggish economy, the Bush administration sent out tax rebate checks. That was a little-noted early stimulus plan.)

In a July report, Princeton University economist Alan Blinder and Moody’s Analytics chief economist Mark Zandi, who advised John McCain’s campaign, concluded: “The stimulus has done what it was supposed to do: end the Great Recession and spur recovery.” Without the stimulus programs, they said, the unemployment rate would be around 1.5 percent higher.

Thurmond, whose department oversees vocational training programs, said that he set aside stimulus funds for the project because the old training center was dilapidated and “an embarrassment to the state of Georgia.”

The stimulus funds were “a Godsend, the money coming in the midst of a recession when state funds were being cut, to address this huge need we had,” he said.

Since he has mounted a quixotic challenge to popular GOP incumbent Senator Johnny Isakson, Thurmond might consider another aspect of the project useful to his campaign: It will generate some 200 construction jobs, according to John Farmer, a director of construction for the Beck Group, which won the state contract.

“That doesn’t count the jobs in manufacturing. All the materials have to be manufactured,” Farmer added.

But the Recovery Act remains little appreciated among average voters. Few seem to know, for example, that nearly one-third of the $787 billion Recovery Act came in the form of tax cuts, which benefitted 95 percent of households. The tax cuts didn’t go out as separate checks but took the form of slight increases in take-home pay, as the federal government withheld less.

That strategy was intentional; President Obama and his advisers believed that consumers would more likely spend small increases on items such as groceries and clothes, stimulating the economy. A larger check might have gone to savings accounts, with no effect on retail sales.

So the economic effect was just what the president and his advisers had hoped. The political effect, however, was less than useful for Democrats — voters who don’t believe their taxes were cut. Meanwhile, Republicans and their allies in the rightwing noise machine have done everything possible to persuade voters that the stimulus legislation was a model of government waste.

The new rehab center, which is expected to open in November 2011, will include a dormitory, cafeteria and classrooms, as well as modern greenhouses, an amphitheater and a basketball court. Its opening will no doubt draw an even larger group of politicians, many of whom insist that the Recovery Act was a disastrous mistake.

480 comments Add your comment

T-Town

October 13th, 2010
8:07 am

It may be 20-20 hindsight, but the stimulus plan has done little to stem the unemployment rate still well over 9%. I have no idea at what price these 200 were created with, but I think to the average citizen it was way too much. This coming from someone who not only lost his job, but his home to foreclosure. Too little too late from Bush and Obama.

Jack

October 13th, 2010
8:11 am

“Make do” jobs have no lasting effect on the economy. But they do provide bragging rights for liberals.

granny godzilla

October 13th, 2010
8:14 am

Why certainly it did!

And serious people understand it and appreciate it.

The rest will be stimilated to insult our host and all serious people for the balance of the commenting day.

granny godzilla

October 13th, 2010
8:15 am

make that stimulated….

Corey

October 13th, 2010
8:17 am

What does a Republican have to do to not get elected in in Georgia, admit he’s an ax murderer? It’s unbelievable that Nathan Deal with a trail of ethics issues and financial shortcomings is leading by a hefty margin in the polls against Roy Barnes. If Mr. Barnes had all of Mr. Deal’s baggage he would be polling at a single digit. Absolutely unbelievable. There are those on the right who proclaim that Mr. Obama is the worst president ever which remains to be seen, but one thing for certain he inherited a nation in worst shape ever in modern times.

Good Grief

October 13th, 2010
8:19 am

CT, how do you feel about all the “stimulus” money spent to create road-side signage telling us how wonderful the “stimulus’ is? I’ve heard some estimates upwards of $100,000 to create and maintain a single sign.

JKL2

October 13th, 2010
8:19 am

granny- And serious people understand it and appreciate it.

They(yourself included) don’t understand it and that’s the problem. Your grandkids will get to understand it as they will be stuck picking up your tab.

Cynthia Is Sexy!!

October 13th, 2010
8:20 am

Thanks Corey. The Dems should never have put Barnes on the State ballot. Was a dumb decision and now they will again receive a well deserved paddling.

Peadawg

October 13th, 2010
8:21 am

Corey, you can blame that on the Democrats in Washington. The D by Barnes’s name is what’s holding him back.

granny godzilla

October 13th, 2010
8:25 am

JKl2

I really don’t take seriously comments by folks who pass along false quotes in order to bolster their already weak arguments.

I would posit you don’t understand the very basics of common decency,
character and integrity.

But you do regularly spell well.

Worry about your own grandkids, mine are very well tended.

granny godzilla

October 13th, 2010
8:27 am

Bob

Your comment is way over the top.

Shame on you.

DebbieDoRight

October 13th, 2010
8:29 am

That strategy was intentional; President Obama and his advisers believed that consumers would more likely spend small increases on items such as groceries and clothes, stimulating the economy. A larger check might have gone to savings accounts, with no effect on retail sales

A’la Bush’s “Stimulus” Checks.

Bob

October 13th, 2010
8:30 am

Corey, until ten years ago, Barnes would have been elected if he was an ax murderer. This was a one party state for over 100 years and the folks running Atlanta have no scapegoat for the failing infastructure and failing schools. Obo can blame Bush, the APS can’t. Speaking of OBO, why is his justice dept not filing charges against the Chamber of Commerce for accepting foreign funds, everyone knows he has the proof.

DebbieDoRight

October 13th, 2010
8:31 am

jack: “Make do” jobs have no lasting effect on the economy. But they do provide bragging rights for liberals

Since the recession started in 2007 – how many jobs have the Repubs created?

Mystified

October 13th, 2010
8:31 am

No doubt some of the stimulus money created some “good things”. But were the good things worth spending $750 billion in debt money? Here is the philosophical difference. Is paying $100 for a $10 bill a good deal? The dems will comment on what a nice $10 bill it is and have no understanding of why repubs complain that it cost too much.

Aquagirl

October 13th, 2010
8:32 am

granny, too much stimulation for you at this hour?

Mystified

October 13th, 2010
8:34 am

When you are spending someone else’s money, in this case money that will be taken from our great grand kids, you don’t seem to worry quite as much about getting value.

Cynthia Is Sexy!!

October 13th, 2010
8:38 am

More stimulus money was wasted than was put to good use. Yet another Obama-debacle.

Alatsea

October 13th, 2010
8:38 am

Using taxpayer money on something with a very low return on, and your ramblings below about this fairyland of tax cuts and jobs, is about to explode into the largest tax increases ever in history, yes ever. Are you really that shallow thinking of a person? You should go to Hollywood and write screen plays because most everything you write is make believe.

“The tax cuts didn’t go out as separate checks but took the form of slight increases in take-home pay, as the federal government withheld less.

That strategy was intentional; President Obama and his advisers believed that consumers would more likely spend small increases on items such as groceries and clothes, stimulating the economy. A larger check might have gone to savings accounts, with no effect on retail sales.”

Kool-aid has nothing to do with this, you just need to get a grip.

granny godzilla

October 13th, 2010
8:38 am

Aquagirl…

I always enjoy morning stimulation, don’t you?

Eric Pearson

October 13th, 2010
8:38 am

My theory is that folks in Georgia, Alabama, South Carolina, Mississippi and other “progressive, highly educated” states tend to vote against our best interests (read republican) because they think that’s what God wants them to do. I’m hopeful that eventually, when it gets so freaking bad, even the Godists will see the light. However, I don’t expect any rapid improvement in this area. The Beck and Hannity types seem to have them by their highly profitable nuts and they’re not likely to let go anytime soon.

Cynthia Is Sexy!!

October 13th, 2010
8:40 am

“Speaking of OBO, why is his justice dept not filing charges against the Chamber of Commerce for accepting foreign funds, everyone knows he has the proof.”

While not voting for Obama, I did at one time think he was a fairly intelligent individual, however he keeps stepping from one pile and right into the next. Guess I was wrong.

Van Jones

October 13th, 2010
8:40 am

I will never be able to get behind the notion of being taxed by the federal govt only to have some “group” decide how much of my tax money I get back in terms of projects THEY believe are important.

Booger Presley

October 13th, 2010
8:43 am

Eric P…I dont know about all that but I watch Hannity and he tosses around the football everynight and he is a football fan so that is good enough for me!

I like football, hannity and the GOP.

Mystified

October 13th, 2010
8:43 am

Hey…. If you disagree with my viewpoint, I’ll just insult your intelligence, your education, call you names and I’ll never actually have to engage in meaningful debate. I mean surely I can’t be wrong on anything.

Great philosophy Pearson, you should write for the AJC.

T-Town

October 13th, 2010
8:46 am

In my lifetime I have never seen so many spend so much that belongs to others, with very little results, then call it a success.

granny godzilla

October 13th, 2010
8:46 am

Van Jones

Did you always feel that way or did the symptoms start in January 2009?

See, that’s how government works.

I understand your feelings though. I wasn’t crazy about a group spending my money invading a country that didn’t attack us. I disliked having a group spend my money on abstinence only education. I was
distressed to see a group create the boondoggle that is DHS.

Gator Joe

October 13th, 2010
8:48 am

Cynthia,
Characteristicly of hypocritical politicians, in this case (and often) Republicans, they opposed the stimulus and then step up to have their pictures taken with shovels and hardhats at ground-breaking for stimulus funded projects. As for average voters lacking appreciation for the stimulus and the jobs it has provided, many of them live in an insular bubble which Limbaugh, Beck, Hannity and Fox “news” has created for them, and have a distorted, if any, view of the stimulus.

Booger Presley

October 13th, 2010
8:48 am

Perhaps some of the stimulus money could be used to train and re-train french fry cooks thereby enabling them to make a nice salary of oh say $25K annually. Because they are all good people and deserve it.

RELIABLE SOURCE

October 13th, 2010
8:49 am

Eric @ 8:38

What’s your theory?

Evelyce

October 13th, 2010
8:49 am

It looks like the only thing the stimulus bought was the Kool Aid that you all drank.

Van Jones

October 13th, 2010
8:50 am

Granny, I’ve felt that way for a long time. Poor attempt at baiting though.

Poor Boy from Alabama

October 13th, 2010
8:50 am

There’s an awful lot of political spin in the argument Ms. Tucker is making today.

There’s no denying that the stimulus had some effect. It’s almost impossible to spend three quarters of a trillion dollars and not see some impact.

The real question was whether the stimulus was well conceived, well executed and met expectations. To a poor boy from Alabama it comes up short on all counts.

Back in October of 2009, Ryan Lizza of the New Yorker did a piece about Larry Summers that included an account of the process by which Obama’s economic team developed the outlines of the stimulus package during the period between the election and the inauguration. A couple of things stand out:

1. Christina Romer’s models showed that there was a $2 trillion output gap in the economy and that at least $1.2 trillion in stimulus was needed to get the economy back on track. The size of the stimulus needed was dependent upon what form it took. Her models showed that government spending had a multiplier of 1.5 (one dollar of government spending would result in $1.50 in GDP) whereas tax cuts had a multiplier of one or less. A stimulus that was all government spending would just about close the gap ($1.2 trillion x 1.5 = $1.8 trillion) whereas a stimulus that was made up mostly of tax cuts would not.

2. Team Obama never seriously considered doing what their own analysis said was required. Here’s a quote from Lizza’s article:

The most important question facing Obama that day was how large the stimulus should be. Since the election, as the economy continued to worsen, the consensus among economists kept rising. A hundred-billion-dollar stimulus had seemed prudent earlier in the year. Congress now appeared receptive to something on the order of five hundred billion. Joseph Stiglitz, the Nobel laureate, was calling for a trillion. Romer had run simulations of the effects of stimulus packages of varying sizes: six hundred billion dollars, eight hundred billion dollars, and $1.2 trillion. The best estimate for the output gap was some two trillion dollars over 2009 and 2010. Because of the multiplier effect, filling that gap didn’t require two trillion dollars of government spending, but Romer’s analysis, deeply informed by her work on the Depression, suggested that the package should probably be more than $1.2 trillion. The memo to Obama, however, detailed only two packages: a five-hundred-and-fifty-billion-dollar stimulus and an eight-hundred-and-ninety-billion-dollar stimulus. Summers did not include Romer’s $1.2-trillion projection. The memo argued that the stimulus should not be used to fill the entire output gap; rather, it was “an insurance package against catastrophic failure.” At the meeting, according to one participant, “there was no serious discussion to going above a trillion dollars.”

newyorker.com/reporting/2009/10/12/091012fa_fact_lizza

Peter Orszag, Obama’s former head of OMB was on the Charlie Rose show recently and basically confirmed the accuracy of Lizza’s reporting.

We ended up with a stimulus package that was improperly sized and poorly constructed. It did not meet its stated unemployment objective and contained a lot of stuff that won’t create jobs or stimulate the economy. Many economists are now saying the the unemployment rate will average at least 9% through 2012.

So while there may have been some useful expenditures in the stimulus, it’s hard to see how anybody can call it a success overall.

hdhd

October 13th, 2010
8:50 am

But remeber that is not free money. It has to be paid back. The resulting economic improvement it may (or may not) have “stimulated” will never be enough to pay back the full bill. Just not possible. The government via taxation destroys economic wealth.

JKL2

October 13th, 2010
8:51 am

granny- I would posit you don’t understand the very basics of common decency, character and integrity

Let me know where you want the powerpoint sent to. It’s on my desktop as we speak.

The term is paraphrasing. It means it wasn’t an exact quote. It doesn’t make it false as your ability to find something on the internet doesn’t make it true.

DebbieDoRight

October 13th, 2010
8:51 am

Bob, what IS your fascination with African Men’s genitals? Enquiring minds wanna know………

RELIABLE SOURCE

October 13th, 2010
8:52 am

granny godzilla
October 13th, 2010
8:46 am

But we did teach some of the African nation how to cleanse their Johnson’s. Can you remember how much of our money was spent on that. And what did they use as a baseline?

granny godzilla

October 13th, 2010
8:52 am

Van Jones

No baiting I promise.

Never could stand the idea of poking a hook through a living creatures skull.

Did you have problems with the same items I mentioned?

Keep up the good fight!

October 13th, 2010
8:52 am

Yes, the Recovery Act helped a great deal and all those against it are lined up to turn over dirt and take credit whenever there is an opportunity. Was it enough? Probably not because it was weakened with tax cuts and there could have been some follow up had the Party of No not been playing politics at the expense of the middle class.

Eric Pearson

October 13th, 2010
8:52 am

Theory: abstract thought, a plausible or acceptable general principle offered to explain observed facts. I can do that and not offer a “philosophy’, Mysti.

granny godzilla

October 13th, 2010
8:53 am

Reliable Source

New name, old meme

resno2

October 13th, 2010
8:53 am

787 billion helps create 2.7 million jobs to the tune of $290,000/job. I wonder if that cost includes the cost of barrycare and government pension too?

Awful KaNawful

October 13th, 2010
8:55 am

I wish Evel were still around. He would have some harsh words for Mr Obama and his wasteful stimulus lack of planning.

DebbieDoRight

October 13th, 2010
8:56 am

Gator: As for average voters lacking appreciation for the stimulus and the jobs it has provided, many of them live in an insular bubble which Limbaugh, Beck, Hannity and Fox “news” has created for them, and have a distorted, if any, view of the stimulus.

Most of them wouldn’t know “news” if it bit them in their buttocks. They’re addicted to the 10 second MTV-like, mix spin tape, deeply edited “news”; a’la Shirley Sherrod’s “confession”.

Owl

October 13th, 2010
8:57 am

Stimulus money has saved us with a faciltiy opening in November of 2001!
Although I have never agreed with you- it’s always a funny way to spin my mornings.

Keep up the good fight!

October 13th, 2010
8:57 am

My, my….seems the racists are getting an early start today. I suspect we’ll see the continued posts today with similar over the top themes and more false claims about stim programs.

Oh and lets get it out of the way….NOV is coming.

StJ

October 13th, 2010
8:58 am

“…unpopular federal government program that has cut taxes…”

The “tax cuts” consist of a permanent tax hike covered up with a temporary tax cut for TY 2009 and TY 2010. Wait until the temporary tax cuts disappear.

DebbieDoRight

October 13th, 2010
8:58 am

But we did teach some of the African nation how to cleanse their Johnson’s

Another one fascinated by African’s “johnsons”………hmmmmmmm…………..

Trusslady

October 13th, 2010
8:59 am

Republicans spent 8 years running up the debt, and then telling us “deficits don’t matter”. Now suddenly it matters. When Democrats pointed out that Republican spending would burden our grandchildren, Republicans called it whining. And of course, since the entire economy was built on sand and the inevitable occurred, now it is the Democrats fault. Ah, yes – the uneducated in this state strike yet again!

Mike

October 13th, 2010
8:59 am

Nothing more than the same old Democratic dogma – tax & give it away. A short term fix at best, like a sugar high, but after the buzz is gone, somebody’s got to pay for it. Guess who.