Did stimulus really work? Biden in town to trumpet Recovery Act success

News-DemocratFebruary 18, 2014 

— Vice President Joe Biden Jr. is scheduled to appear at noon Wednesday at America's Central Port to tout the positive effect of the American Recovery and Reinvestment Act on the five-year anniversary of its signing into law.

Biden will argue the $831 billion stimulus package passed by Democratic majorities in the House and Senate saved or created more than 6 million jobs and averted a second Great Depression.

Republican leaders, however, have vehemently opposed the stimulus package and have criticized the Recovery Act as an expensive flop.

The state of Illinois was awarded more than $12 billion in stimulus money but only received $9.44 billion, according to the federal government's tracking website, www.recovery.gov.

St. Clair County has so far received nearly $217.7 million for 244 separate projects, with the largest single recipient being East St. Louis School District 189, which was awarded more than $37 million for building construction and maintenance projects, and efforts to help low-income students, according to the website.

Madison County was awarded $220 million for 250 separate projects. The largest single award in that county was for $14.5 million to America's Central Port for infrastructure expansion and improvements, according to the www.recovery.gov website.

Five years after the passing of the Recovery Act, which included tax cuts for businesses and individuals, mandatory spending on Medicaid and unemployment benefits and local expenditures on "shovel ready" infrastructure projects, such as roads and bridges, its effect on the economy of both the nation and Illinois remain controversial.

In its final report on the Recovery Act issued earlier this month, the White House's Council of Economic Advisers noted that Obama took office in January 2009 during the worst economic crisis to face the nation since the Great Depression.

"In the previous year private employers shed 3.8 million jobs," the report reminded its readers. "Trillions of dollars of household wealth had been wiped out ..."

The council report concluded that the Recovery Act alone raided the nation's Gross Domestic Product "by between 2 and 3 percent" from late 2009 to mid-2011, and that cumulative gain in employment through the end of 2012 was "9 million job-years."

But in Illinois, observers take a much dimmer view of the Recovery Act's effect.

Ted Dabrowski, vice president of the Illinois Policy Institute, a free market think tank in Chicago, pointed out that Illinois, with a 8.6 percent unemployment rate, has the third-highest jobless rate in the nation, despite the $12 billion in stimulus money awarded to the state.

"We're a full two full percentage points higher than the national average, and if you compare to our neighboring states, it's even worse," Dabrowski said.

Another problem is the Recovery Act spending increased the amount of debt at both the state and federal levels, resulting in increased taxes and "basically squeezed out the private sector, creating fewer jobs," he said.

Fred Giertz, an economist with the Institute for Government Affairs, at the University of Illinois, Urbana-Champaign, criticized the Recovery Act for lavishing taxpayer dollars on ill-advised and unnecessary projects.

In Champaign, for instance, the Recovery Act provided $30 million on an underground Internet cable system no one is now using, Giertz said.

"They could have spent $30 million on more productive ways than they did," he said.

But Dennis Wilmsmeyer, executive director of the Tri City Port District, which oversees America's Central Port, in Granite City, said the $14.5 million in Recovery Act money spent on building a harbor and other infrastructure at the port provided good value.

"One of our major tenants and several others here are interested in that harbor being in place, and have counted on that harbor being there," said Wilmsmeyer of the port, the setting for Biden's scheduled visit Wednesday.

Five private sector companies have moved to the port since the stimulus money arrived in 2009, employing 220 people "that were not here before," he said. "This is good news."

Contact reporter Mike Fitzgerald at mfitzgerald@bnd.com or 618-239-2533.

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