A Fistful of Stimulus

With pundits and economic experts debating a second stimulus package to turn around stagnant market growth and the continuing rise in jobless claims, average consumers are wondering why the original $787 billion didn't immediately solve the country's economic woes. The answers to this qualm are myriad, and everyone seems to be forgetting that the current funds are actually the fifth stimulus package of the decade; the Bush administration enacted several (in 2001, 2002, 2003 and 2008) as stop-gap measures to stem the coming economic hemorrhage. The last was the Economic Stimulus Act of 2008, a $150 billion cash infusion that was doled out in tax rebates.

Obama's package differs greatly from his predecessor's as it tackles both relief and recovery. The relief part takes the immediate stress off the economy by lightening the burden on cash-strapped Americans and putting cash in consumer hands. The recovery aspect is a square-one approach, achieved through future tax cuts and spending that's geared toward stimulating production which will, in theory, drive investment and create sustainable growth. Here's a quick breakdown of the stimulus money (Visit the Washington Post for a more detailed view):

° $288 billion in tax relief, largely credits for individuals with some cuts to corporations

° $148 billion in health care spending, the bulk aimed toward Medicaid and low-income Americans

° $91 billion in educational spending, geared mainly to keep teachers employed and for Pell Grants

° $83 billion, with half headed toward unemployment extension for laid-off workers, the other half for low-income Americans, welfare and job training

° $81 billion toward infrastructure, including highway construction, railways and public transportation

° $61 billion for energy, with large amounts for sustainable energy, the Smart Grid and EPA Superfund cleanup projects

° $18 billion in miscellaneous spending, mostly toward state budget deficits, with funds for public safety, veterans benefits and agriculture

° $13 billion for HUD and low-income housing repair and construction

° $9 billion to science, space and energy research.

Overall, it's a strong plan, and probably the minimum necessary to achieve the desired results. Some would argue with this, believing erroneously that no stimulus was necessary -- that economies should follow a Darwinian course and let the chips fall. Others say it's clearly not enough. Or at least not fast enough. The $288 billion in tax relief is a two-year plan, but of the $499 billion in actual spending -- the part that's intended to bolster employment -- only $60 billion, or roughly 12 percent, has been injected into the economy over five months.

Most people probably don't realize how close America (and the world) came to complete economic devastation. It was more than a close scrape, and to recover from this deep of a financial chasm is certainly not going to occur in five months. Even two years is optimistic, but then again, optimism has achieved stranger feats, and so far, it's been an effective salve for the national mindset. For those who expected quicker results, it's going to take until late 2010 both to channel all the stimulus money to so many destinations and for many of the tax cuts to engage. But as the old axiom goes, good things come to those who wait. For a nation now waking from two slumberous decades of relative convenience and ease, a little patience certainly has its appeal.

(Photo courtesy Tracy Olson, via Flickr)