Impact of $787B stimulus debatable a year later

One year after Washington's $787 billion attempt to help right the economic ship, there's still debate on whether the stimulus package worked or if America will need another policy jump-start.

The Obama administration's stance is that the outcome of the recession - which started in December 2007 - would have been far worse had it not been for actions such as enacting the American Recovery and Reinvestment Act of 2009.

The nation's unemployment rate has risen 2 percentage points to 9.7 percent in January compared to January 2009, but the stock market has rebounded and some indexes for manufacturing production are higher now than a year ago.

Christina Romer, chairwoman of the president's Council of Economic Advisers, called the Recovery Act "the great unsung hero of the past year" in comments on the White House's blog last week.

Funding went toward three categories: tax benefits; contracts, grants and loans; and entitlements. But dollars went to fund an array of sources: local school budgets, home weatherization programs, high-speed rail projects, municipal brownfields assessment efforts, research grants and tax credits.

Indiana University Northwest economics professor Don Coffin said the government took the approach of "throw things at the wall and see if they stick" with the allocations and other programs created. Cash for Clunkers was not a part of American Recovery and Reinvestment Act, but it was a program created to spur spending in one industry. It produced a dramatic, temporary impact increasing new car sales.

"It's a reasonable strategy because it's hard to get a sense of what will work best and what may not have much of an impact," Coffin said.

Bill McCabe, owner of Century 21 Executive Realty in Schererville, said the first-time homebuyers tax credit helped boost sales in 2009. The stimulus package increased the federal tax credit for people in this category to $8,000 and was later extended to include a broader category of homebuyers.

"The stimulus was a real, real big thing for us," McCabe said.

About 35 percent of the allotted money for the American Recovery and Reinvestment Act of 2009 had been distributed as of Jan. 29, according to the government Web site, Recovery.gov.

Randy Palmateer, business manager for the Northwestern Indiana Building and Construction Trades Council, said in a recent interview he wished the stimulus package would have had a larger impact in spurring Northwest Indiana infrastructure projects.

A stubbornly high deficit is adding to the public relations problem. Late last month, the Congressional Budget Office projected a deficit of more than $1.3 trillion in the fiscal year ending Sept. 30 if current policies remain unchanged. The deficit didn't reach a near record-high overnight, but there's a growing backlash from people saying the increased spending hasn't produced the promised results, said Saul Lerner, a history professor at Purdue University Calumet.

Lerner said President Franklin D. Roosevelt also went through difficult times as the country's chief executive during the Great Depression. He said Roosevelt's New Deal programs were able to instill confidence in the economic system, which is something the current administration is finding very difficult to do. He said the public is growing weary of partisan bickering in Washington and legislators not being able to come to a consensus on policies to help move the country forward.

"We currently have a Congress that is unwilling to act, and I think that's the part of it that the public is troubled about," Lerner said.