As I anticipated some months back, people are impatient about getting the stimulus money into play. This NYT piece
on how France has spent 70% of its stimulus money catches the current meme -- especially with the job market in such lousy shape.
As I wrote back when the stimulus passed
, the stimulus bill is trying to do two things. One is inject money into the economy, the other is to fundamentally change the economy. As a result, we have a slow release of money over time rather than a massive dump of work projects.
The first stage of the money spigot was extending unemployment benefits and passing money to states for traditional construction project type things. There was also the usual larding of useless tax breaks, which people keep insisting gives money in the economy right away and I keep pointing out are pretty damn useless given that most corporations aren't paying taxes given how the tax code works, so the impact on behavior is minimal. The second stage was standard construction type projects and what most people think of as traditional New Deal stuff.
The third and most critical phase is where we are now. the innovative programs around smart grid, BB stimulus, transportation, education, and healthcare are finally starting to come online. these are projects that will not just create an infusion of short term jobs, but can fundamentally alter how we do business -- which is critical to our national survival as an economic power. We cannot
continue relying on a combination of consumer spending and financial market tricks to push us forward. But the economy right now is 2/3 consumer spending. That has to change or we will quickly be right back where we started from.
Mind you, I think the Administration has screwed up the recovery in a number of ways, but they are largely in the refusal of Congress and the Treasury to take on the mortgage crisis and the financial sector. Without cram down and real mortgage relief, bad paper remains an anchor on the financial system and real estate values continue to decline. Nor do people spend money and engage in productive economic activity when they feel buried in credit card debt or have an underwater mortgage hovering above their head. At some point, the delicacy toward the financial sector must give way or we will all go under.