Monday, December 22, 2008
WE'RE HAPPY to see that the shroud of secrecy surrounding the formulation of an economic stimulus plan by President-elect Barack Obama is lifting, albeit through leaks. Since his advisers met with congressional leaders last week, details from the Capitol Hill briefing have trickled out that are bringing the impending stimulus package into focus. Yet concern about transparency has given way to concern that the economic crisis will be used as an excuse to throw sacks of cash at projects instead of leading to the development of discrete proposals that pack a lot of punch in the short term. That Mr. Obama is reportedly prepared for his plan to rise from as little as $670 billion to as much as $850 billion because of additions from Congress only reinforces that fear.
"We're not intending to spend money lightly," Mr. Obama said Friday while refusing to put a firm price tag on his stimulus package, the goal of which is to create or preserve at least 3 million jobs over the next two years. That may be, but we've seen this before. In fact, it was in late September, when the financial rescue plan, billed as desperately needed for the economy's survival, was larded up with unrelated measures that couldn't pass on their own. With every constituency that has gone begging for federal money for years now developing wish lists for Washington to consider, it could happen again. It mustn't. We agree with Alice Rivlin, budget director under President Bill Clinton, that the best way to ensure this is for Mr. Obama to pursue a smaller package that would inject cash into the economy almost immediately.
Much of what Ms. Rivlin proposes appears to be in the larger plan Mr. Obama's economic advisers presented to Congress last week. It includes increased money for food stamps, bigger block grants to states (in addition to an increase in the Medicaid match they receive from the federal government) and funding for "shovel-ready" infrastructure projects. There would be a reduction in withholding for income or payroll taxes, and unemployment benefits would be extended. Together these measures would put money in the hands of struggling families. They will make it cheaper for employers to hire people. And they will give states the assist they need to balance exploding budget deficits while completing overdue infrastructure repairs. An encouraging proviso on the federal money for states is a "use it or lose it" clause that could make local governments more accountable and hasten the completion of the intended task.
In no way are we advocating that Mr. Obama abandon his larger plans for transportation and infrastructure, digitizing medical records, school construction and repairs, and energy efficiency. But as Ms. Rivlin told us, there shouldn't be a "huge commitment to long-term building without a well-scrubbed long-term plan. What do we really need to spend the money on?" That kind of plan and the discussion it should entail should not be rushed through in the next two months. Mr. Obama has said that the economic crisis provides the nation with an opportunity to transform its economy. If it's not done right, it will have been an opportunity wasted.