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Stimulus did some good, but it didn’t do it well

 

The stimulus was historic in size and included funding for infrastructure projects, tax cuts, “green” projects and other areas meant to save/create jobs or stimulate the economy. A few weeks ago we published a piece on how this landmark rescue package impacted Pickens County. The original story is available here.

Pickens received about $25 million of the $840 billion that has been distributed around the country. Of that, $5.1 million went to education, $5.9 went to Small Business Administration Loans, and $6.8 went to North Georgia Community Action to weatherize homes or prevent eviction or foreclosure. The rest went to low-income housing loans, the Boys & Girls Club of North Georgia, the county government for a raised water tank, and a few other areas.

 

Congressional Budget Office Director Doug Elmendorf recently told congress, “Our position is that [the stimulus] created higher [production] and employment than would have occurred without it."

We agree but only to a small degree.

 

While researching the local impact, we found the stimulus did plenty of good: saving nearly 30 jobs in the local school system; creating some jobs through small business start-ups that received SBA loans; employing local contractors through weatherization programs, among other things. But our research also showed  that while the government is capable of creating these jobs, it isn’t very efficient about doing it, and it didn’t create many here. All of the red tape associated with the federal money also made it difficult to make a quick impact, and the stimulus fell short of creating a long-term, sustainable job market.

 

According to the U.S. Department of Labor, unemployment here recently peaked in January 2010 at 11.3 percent and fell into the 9 percent range through October of 2010. After October 2010, unemployment again rose above 10 percent, and it wasn’t until the end of last year that it fell below nine percent. To offer some perspective, unemployment in Pickens County fell below two percent in the late 1990s and quickly rose from around three to four percent in 2007 to over 10 percent in 2009. In that short two-year period of time, nearly 2,000 jobs were lost here. Yes, there were jobs created through the stimulus, but the number of those new jobs was just a handful compared to the number of jobs lost, and many of the new ones are already gone.

 

For example, take the positions created through the North Georgia Community Action organization (just over 30 in the 10-county region served), which were temporary and quickly disappeared with the weatherization program. Then look at the school system. While there were employees retained with stimulus dollars, the system still faces the same massive state budget cuts, and the stimulus money has now disappeared. They are now looking at a huge increase in health insurance costs for school employees and have said drastic steps to weather these costs are now under consideration.

 

Barring the school system, we also think it took too long for stimulus money to have any effect. Take, for example, the water tank on Whorley Crossroads, the county’s “shovel-ready” project that practically drowned in red tape. County water director Larry Coleman said the county could have applied for other projects through the stimulus, “but we had to jump through so many hoops for that money it wasn’t worth it,” he said. It took months and several amended applications before work could begin.

Instead of these shovel-ready projects, why couldn’t the federal government implement something similar to the Work Project Administration, the agency created under the New Deal. Instead of workers having to be already employed by a company, this model put unemployed and unskilled people to work for eight years on public works projects in nearly every community.

 

We like the fact homes were weatherized here, that people avoided foreclosure and that a handful of people got or retained a job. We aren’t opposed to stimulus packages as a way to help the economy, but the largest stimulus package in history fell short of its potential.


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