February 17th, 2009
Obama signs economic stimulus bill

Tom McNamara, Blueprint America

As President Barack Obama signed the stimulus bill in Denver on Tuesday, it released the biggest influx of federal dollars since the Great Society program of President Lyndon B. Johnson.

Unlike LBJ, President Obama – working with less of a Democratic majority – ultimately had to make significant concessions to Congressional moderates and Republicans to pass the bill. In the end, 246 House Democrats, 57 Senate Democrats and three Senate Republicans voted to pass this compromise version of the economic stimulus package.

In order to gain those three Senate Republican votes, reductions in spending were made in favor of tax cuts, including breaks to car and home buyers.

The initial House version was far more liberal in spending provisions compared to what the Senate later agreed upon.

Spending on mass transit went from $12 billion in the House to $8.4 billion in the Senate, and the President approved the latter. Total highway funding went from $30 billion in the House to $27 billion in the Senate, and, similarly, the President approved the latter.

One of the most significant reductions was a cut of $25 billion from a state fiscal stabilization fund. The House had proposed $79 billion; the Senate reduced it to $39 billion. The final agreement fell in between.

As a result, no matter how much is federally spent to improve infrastructure in the future, the impact will be little felt as most states across the country are experiencing substantial budget shortfalls.

Certainly, projects that are shovel ready – projects that have gone through the approval process and have already received state funding – only need the infusion of federal dollars to get going. However, necessary infrastructure projects down the road will have a difficult time getting off the ground as state dollars are first needed – and these deficits are long term problems. Moreover, some states are even facing drastic enough budget problems to discontinue infrastructure projects already underway.

In California, abandoned construction sites marked by piles of dirt line some highways as projects to decongest the state’s stressed transportation system have been suspended until a $41 billion state budget deficit is closed. In terms of mass transit, the state continues to reduce funding as a way to fill a few funding holes.

As the economic stimulus bill was signed, the President said he would not pretend “that today marks the end of our economic problems.” Another economic stimulus could be coming in the near-future as states will undoubtedly need more assistance – including funding for infrastructure – in order to foster the kind of job growth needed to effectively combat this recession.

Sources: The New York Times, The Wall Street Journal

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