Policy Lags And The Stimulus

The post below this one explains the policy lag problem. The article here is Bulk of Stimulus Spending Yet to Come: Most Cash So Far Has Gone to Services, Government Jobs; Infrastructure Surge Unlikely to Put Big Dent in Unemployment. The recession began in December 2007 in 2010 we get the bulk of the stimulus. The article was in the WSJ 2-17-2010, page A2. The key exerpts are:

"Most of the money allocated to specific projects hasn't been paid out yet, and there are still an additional $195 billion in tax cuts on the way."

"But the bulk of the money proposed for projects like new rail lines and water projects—about $180 billion in all—is likely to be spent this year at the earliest. During year one of the stimulus, only about $20 billion of money was handed out for infrastructure projects."

"The "shovel ready" projects administration officials pointed to as a source of new jobs have taken months to get organized."

"In some cases, federal agencies have had to set up entirely new programs.

Many signature projects—including $20 billion for doctors to create electronic medical records, $4.5 billion for an energy Smart Grid and $7.2 billion for broadband networks—are still in their very early stages."

"Government data indicate that most of the jobs supported by stimulus spending belonged to public employees at the state and local level, including about 325,000 teachers and school staff."

"Government data indicate that most of the jobs supported by stimulus spending belonged to public employees at the state and local level, including about 325,000 teachers and school staff.

Subsidizing those jobs avoided layoffs, or state and local tax increases that could have further undermined the economy. But they didn't result in substantial hiring of people who had lost private-sector jobs."

"Of the $179 billion in stimulus funds paid out last year, $112 billion has gone out in the form of large checks to state governments to plug holes in school, Medicaid and unemployment-benefits budgets, or to increase funding for established programs, such as food stamps, according to a Wall Street Journal analysis."