Five months after President Obama signed the $787 billion stimulus package, some of the money has begun making its way to states. Experts measure the impact the funds have had on local communities.
JIM LEHRER: Now, economic stimulus part two, the new debate
here. Gwen Ifill has that story.
GWEN IFILL: Nearly five months after President Obama signed
the $787 billion stimulus bill, some of the money has begun making its way to
states and to construction projects. And according to the White House, 150,000
jobs have been saved or created.
But the economy has shed more than 6 million jobs since
December 2007, including 433,000 lost just in June.
Vice President Biden defended the jump-start package this
week, saying the recession was deeper than anticipated.
JOSEPH BIDEN, vice president of the United States:
And so the truth is, there was a misreading of just how bad an economy we
inherited. Now, that doesn't -- I'm not laying this -- it's now our
So the second question becomes, did the economic package we
put in place, including the Recovery Act, is it the right package, given the
circumstances we're in? And we believe it is the right package, given the
circumstances we're in.
GWEN IFILL: But Republicans don't buy that argument. House Minority
Leader John Boehner weighed in today.
REP. JOHN BOEHNER, R-Ohio: And I found it also interesting
over the last couple of days to hear the vice president, Vice President Biden,
and the president mention the fact they didn't realize how difficult an economic
circumstance we were in.
Now, this is the greatest fabrication I've seen since I've
been in Congress. I sat through those meetings at the White House with the
president and the vice president. Trust me: There's not one person that sat in
those rooms that didn't know how serious our economic crisis was.
GWEN IFILL: With the nation's unemployment rate now at 9.5
percent, lawmakers are now discussing whether a second stimulus may be needed.
For a closer look at the stimulus package, how it is or is
not fulfilling expectations, we turn to Mark Zandi, chief economist at Moody's
Economy.com. He has consulted with Congress and the White House during the
And House Minority Whip Eric Cantor of Virginia.
We have invited and also hope to be joined by Chris Van
Hollen of Maryland,
head of the Democratic Congressional Campaign Committee.
Mark Zandi, I'll start with you, because you were at ground
zero in all of this when people were talking about the need for a stimulus
plan. Is it working?
State of the stimulus
MARK ZANDI, chief economist, Moody's Economy.com: Yes, it's
working pretty close to what I would have expected at this point in time. It's
still early days. You know, we're only four or five months into the package.
But state governments are getting checks. Unemployed workers
are getting more benefits. Social Security recipients got a check in the mail
in May. People who are working have lower withholding. Business tax cuts are
filtering through, and we're even getting some infrastructure spending.
So everything is going according to script, at least so far.
GWEN IFILL: Well, let me ask Eric Cantor about that. You've
had some disagreements on this point with other members of your body, but also
with the White House. What do you think abut how the package has been going?
And you didn't support it, it should be said.
REP. ERIC CANTOR, R-Va.: Right, Gwen. I think that if
there's one thing we can all agree upon, as we heard the majority leader in the
House, Steny Hoyer, say, as well as the vice president, that we're all
disappointed where things have turned out as we had hoped a lot differently.
And, you know, clearly, the stimulus or so-called stimulus
plan that spent almost $800 billion has not worked. We were promised -- the
president said we would keep unemployment under 8.5 percent. We're now over 9.5
percent on our way to 10 percent. We have had a massive hemorrhaging of jobs in
And, you know, the president said that we had to act and act
quickly. And I guess that's why Speaker Pelosi felt it very necessary to jam
this bill through the House, and now we're seeing that it didn't work.
So the question really is, what is the president going to do
about it? As the vice president indicated, it is his economy now. And so let's
start to do things in a smart way rather than rush to judgment and then flush
out the money without any result.
GWEN IFILL: Let me ask Chris Van Hollen about this, because
it was Vice President Biden who said there had been a misreading of the
economy, something the president backed away from a little bit, but maybe you
can explain to us what it is the vice president meant by that?
REP. CHRIS VAN HOLLEN, D-Md.: Sure. I think what he meant to
say was that the economy that President Obama inherited from George Bush, the
economic downturn and the recession inherited from George Bush, turned out to
be deeper and the decline steeper than people, including many economists,
But that's a very separate question as to whether or not
we'd be better off today if we did not do the economic recovery plan, which is
what Eric is proposing, that we have done -- not have passed that plan.
The fact of the matter is, as Mark Zandi said, we're a whole
lot better off today than we would have been if that had not been passed. The
fact that we're not in an even better place is a reflection of the fact that
the economy is in very deep trouble.
Now, the fact is also that this is a two-year economic
recovery plan. About $200-plus billion dollars has already been committed or
spent and that, over the next quarter, we anticipate more outlays.
Because one of the things the president was very clear about
and the Congress was very clear about is that we want to make sure that these
monies are spent wisely, that they're not wasted, and that requires greater
oversight and transparency. So we're trying to accomplish both goals, and we
are on track.
Tracking the spending
GWEN IFILL: If I could ask you that, because you sit on an
oversight committee which was talking abut this today. And there was some concern
among other lawmakers and even some of the folks who testified, governors who
testified before you, that maybe the money wasn't being allocated correctly?
REP. CHRIS VAN HOLLEN: Well, the testimony in front of our
committee -- as you said, we had three governors, and all three governors
talked about the fact that there had been job creation and jobs saved in their
states as a result of this economic recovery package. They were unanimous on that
point, that their states were better off as result of this and that the people
who lived in the state were better off as a result of this.
Now, they did -- what they said was that, because of the
accountability provisions, some of the money hasn't gotten out of the door as
fast as it might have.
But, again, we want to make sure -- and in order to maintain
the credibility of this program -- that those monies are not misspent. And that
requires more oversight and more accountability. And we've asked the governors
to participate in making sure that they're the taxpayers' watchdogs with the
federal government to make sure those monies are well spent.
GWEN IFILL: Mark Zandi, has that money been spent the way it
was supposed to have the accountability provisions, as Mr. Van Hollen described
them? Have they slowed the process that it was -- this was supposed to be a
speedy injection, and has that slowed it?
MARK ZANDI: Yes, I think to some degree, sure. I mean, I
think everyone wants to make sure that the money gets out in a proper way, and
that requires a lot more information to be provided, and that slows things
But let me say, you know, I do think things are getting out
pretty close to what I would have expected. Now, the infrastructure spending,
the money for roads and bridges and other things, that's going to take time.
And under the best of circumstances, I don't think that we would expect really
to see that towards the second half of this year into 2010.
All the other parts of the stimulus -- the tax cuts, the tax
credit for a first-time home-buyer, the benefits to businesses, the aid to
state government -- that is already flowing to the economy. And I think it is
And here's the most important point: The biggest economic
impact from the stimulus isn't now. It's really going to be in the third
quarter, the Q3, and, more importantly, in Q4 of this year. So we really won't
know with any degree of certainty until very late this year whether this
stimulus plan is working and working well enough.
Too soon to judge?
GWEN IFILL: Mr. Cantor, how about that? Is it just too soon
REP. ERIC CANTOR: Well, Gwen, I am just sitting here a
little bit in disbelief about, you know, making the excuses for the failure of
this bill. The president promised that we would do something to stave off the
And if you are talking about what a stimulus bill should do,
it was about preserving, protecting and creating jobs. This bill has failed
miserably towards that end.
Chris indicates that maybe we as Republicans wanted to do
nothing. Now, he knows that's not true. We presented a plan to the president.
It was a plan focused on the job-generators, which were small-business people.
We've got to go about getting investment started again in
this economy. That's the only way that recovery will take place. Any kind of lasting
rebound has to come from investor confidence, from working families, from small
businesses putting their money back to work again.
This bill has failed in terms of that end. What we've seen
now is, as you indicated, Gwen, tremendous job loss. People are losing jobs at
about eight jobs a minute. That's eight households no longer seeing their
paycheck, wondering how they're going to get through the end of the month.
If you're a factory worker in the Midwest,
if you haven't lost your job already, you're worried you're going to lose it.
If you are a retail sales clerk, you know what? You are worried about your job,
because what do we have coming next is we've got a wage hike that will be
imposed on employers.
Now what we see in Congress is a massive attempt to impose a
national energy tax on families. We've got too many things going in the
opposite direction when we should be about creating jobs here.
GWEN IFILL: Let me ask you about this, Mr. Cantor. They say
they have created or saved 150,000 jobs so far. Is there any argument to be
made that Larry Summers and others have made, the economic adviser, that there
should have been more money spent on this?
REP. ERIC CANTOR: How can you say that? How can you say that
when unemployment now is approaching 10 percent? The president has promised
that we were going to save unemployment from going past 8.5 percent. That's why
we needed to act with such urgency.
As Chris indicates, now, all of a sudden, we're realizing
that there's a lot of waste involved when you flush out $800 billion from Washington. Never does
the federal government perform the way that we could see small businesses
We've got to go put in confidence back in to our economy. We
do that by helping small businesses. We need an investment-led recovery, not Washington spending our
way out. All we're doing is piling up the debt right now. And I think it's
reflected in the lack of confidence in the economy and the markets and
certainly in the polling over the last few days.
Prospects for a second stimulus
GWEN IFILL: Chris Van Hollen, listening to what Eric Cantor
just had to say, it's clear that you're not going to get support for a second
stimulus from his side of the aisle, but is there even going to be support for
another infusion from your side of the aisle?
REP. CHRIS VAN HOLLEN: Well, let me first say, Gwen, I think
the American people are smarter than to think that you can turn over an economy
or turn it around on a dime when you've got an economy that is sinking quickly.
I think I give the American people more credit than that.
Number two, President Obama's recovery plan had a big
component of tax relief for middle-income and lower-income Americans, unlike
the Republican plan, which was essentially all tax relief, when, in fact -- and
adding more to the deficit.
Finally, if there's any criticism that could be levied, as
you suggest, there are some people who are saying that we should have done more
by way of investments. If you had the way of my Republican colleagues, we would
have done a whole lot less and we would have been in much deeper trouble. This
is like running up a down escalator.
GWEN IFILL: What about the second -- what about the second
stimulus? Is that possible?
REP. CHRIS VAN HOLLEN: Well, I think it would be premature
to talk about that now. As Mark Zandi has said, we expect more of the money to
be expended in the third quarter. I think we're going to have to wait and see
what impact that has on the economy.
But, again, if you're running up an escalator that's going
down, if you stand still, you're going down fast. And the reason we're
continuing to make some progress is that we continue to take some steps
forward. But because we've inherited an economy going down fast, it obviously
is difficult to feel.
And, of course, people are suffering out there. We would all
like to see things turn around more quickly. We inherited quite a mess, and
we're trying to fix it.
GWEN IFILL: Mark Zandi, you're the non-politician here. Give
me the pros and cons quickly of whether a second stimulus is desired or even
necessary or politically feasible?
MARK ZANDI: Yes, well, I think it's premature to conclude
one way or the other. We'll have to wait until the end of the year, see how
this stimulus is working, and then, at that point, make a determination.
But, here, I'll give you a benchmark. We lost 2.1 million
jobs in the first quarter. We lost 1.3 million jobs in the second quarter. In
the current quarter if we lose 750,000, and in the fourth quarter 400,000, and
by this time next year we're not losing any jobs, then, by my definition, this
stimulus had worked reasonably well and we won't need another stimulus.
GWEN IFILL: Mark Zandi of Moody's Economy.com, Eric Cantor,
House minority whip, and Chris Van Hollen with the Democratic Congressional Campaign
Committee, thank you all three very much.