With the American economic crisis gone global and a lot riding on efforts to stem the financial slide into a far deeper recession, Washington needed to do more than pass a massive economic stimulus package. It needed to pass a massive economic stimulus package that works.
The $787 billion package it passed was needed, but it may not work. Critics call it either too much or too little. What it may really be is misdirected and too late.
What was and is needed is spending that produces jobs immediately. That's where the money should be directed. Economic stimulus delayed is economic stimulus denied.
Factor out an Alternative Minimum Tax fix that Congress would have done anyway, as it has done annually to stave off middle-class anger, and the package amounts to $700 billion. And billions of that will play out over time -- not immediately, when it's most needed as a stimulant. According to the Congressional Budget Office, about $200 billion would be spent in 2011 or later, long after that money could provide a recession-stemming boost for jobs and development.
The package also helps states stave off short-term economic disaster. With scores of states facing yawning deficits, that's much-needed federal aid. But it only works fully if it is additional spending, not just instead-of spending, and its job-creation goal only is reached if the states were going to lay off workers with the kind of deep spending cuts they've been trying desperately to avoid. And while school districts, counties and some aspects of health care may get breathing room to deal with the yawning fiscal gaps in front of them, disaster simply will be delayed unless real cost-saving changes are addressed now.
Gov. David A. Paterson has been sounding that alarm, loudly. Special interests -- mostly the unions that represent taxpayer-funded labor -- have been trying to shout him down, most loudly through fear-based ad campaigns that are often sophomoric and seldom subtle.
Unless the economy rebounds quickly -- an unlikely prospect, especially if the economic stimulus funding is delayed or dissipated -- the fiscal crisis will come as soon as the two-year federal handout ends. If Paterson's warnings go unheeded, and the Legislature again lacks the political guts to stand up to special interests, New York simply becomes a state of denial.
The federal stimulus package is intended as a bridge to a more stable financial future. But it must also help in building that future. If the key to this particular effort is to spend money right now, it's hard to see how the substantial amount of spending that will be delayed will deliver the help it promises. And if another key is to spend money wisely, so future generations who will have to repay the borrowed cash at least will have something tangible to show for that burden, it's hard to see how simply propping up already-planned state operating costs or advancing favored programs will deliver that benefit.
It remains true that the risks of doing nothing would have been far worse, given an ailing economy that suffers most of all from a crisis in confidence. But it was incumbent on government to do this wisely as well as quickly. The stimulative effect will be diminished by spending delays and by diversions driven by ideological aims, special-interest pressure or basic politics.
Here's the bottom line: The financial crisis faced by the nation, its states and its local governments is a reflection of the financial crisis faced by the folks who fund the governments, people the communities and find themselves worrying about bills, paychecks and survival in a tough time. The goal should be to help them, by using, not just preserving, their governments in ways that save or preserve jobs and stimulate fiscal growth from the bottom up.
Shovel-ready projects? Yes, right now, if they provide a good number of jobs either directly or indirectly. Education and health care aid that can preserve jobs while sparing taxpayers additional burdens on already-stressed personal budgets? Yes, if governments and school boards and industries simultaneously start restructuring, reforming or downsizing to become affordable again. The federal stimulus package has too many delays.