By Alec MacGillis
Washington Post Staff Writer
Wednesday, January 28, 2009
Republican criticism of the stimulus package that the House will vote on tonight has focused on its soaring price tag, but some Democrats on Capitol Hill and other administration supporters are voicing a separate critique: that the plan may fall short in its broader goal of transforming the American economy over the long term.
President Obama, who promoted the $825 billion package at the Capitol yesterday, says the proposal serves two functions -- creating jobs and stimulating the economy in the short term, and laying the groundwork for overhauls in energy, health care and infrastructure that would be felt for decades. But some administration supporters say that while they appreciate Obama's intent, the two goals are competing with each other, and that the package could end up missing both targets.
In testimony before the House Budget Committee yesterday, Alice M. Rivlin, who was President Bill Clinton's budget director, suggested splitting the plan, implementing its immediate stimulus components now and taking more time to plan the longer-term transformative spending to make sure it is done right.
"Such a long-term investment program should not be put together hastily and lumped in with the anti-recession package. The elements of the investment program must be carefully planned and will not create many jobs right away," said Rivlin, a fellow at the Brookings Institution. The risk, she said, is that "money will be wasted because the investment elements were not carefully crafted."
For some House Democrats, the problem is less a matter of balancing the short and long term than a shortage of focus and will on the part of the administration. Their disappointment centers on the relatively small amount devoted to long-lasting infrastructure investments in favor of spending on a long list of government programs. While each serves a purpose, the critics say, they add up to less than the sum of their parts, and fall far short of the transformative New Deal-like vision many of them had entertained.
The bill to be voted on today includes $30 billion for roads and bridges, $9 billion for public transit and $1 billion for inter-city rail -- less than 5 percent of the package's total spending. Administration officials have said they did not push for more infrastructure spending because of concerns about how many projects are "shovel ready" -- a view that House members say is held most strongly by Lawrence H. Summers, Obama's chief economic adviser.
Even though most House Democrats say they will back the plan, many reject the administration's argument, saying that infrastructure projects could easily be expedited, that the economy will need additional infusions for years to come and that the real reason for shunning infrastructure was to make room for tax cuts. Obama, with a public mandate to do something big, is missing a rare opportunity to rebuild the country, they say.
"Every penny of the $825 billion is borrowed against the future of our kids and grandkids, and so the question is: What benefit are we providing them? What are we doing for the country? It's the difference between real investment that will serve the nation for 30, 50 years and tax cuts, and that's a very poor tradeoff," said Rep. Peter A. DeFazio (D-Ore.). "I go to my district and people say, 'Yeah, I can use 10 extra bucks a week, but I would rather see more substantial investment.' We've gone through a couple bubbles that were borrowing and consumer-driven. We want a recovery that's solid and based in investment and productivity, and that points us at building things that will serve us decades to come."
Even some Republicans echo the call for more infrastructure spending, saying they would be more willing to support the bill if it showed more tangible and focused benefits, instead of being scattered across an array of existing programs. Rep. John L. Mica (Fla.), the ranking Republican on the transportation committee, called the proposed infrastructure spending "almost minuscule" and expressed regret that the administration had not crafted its plan around an ambitious goal such as building high-speed rail in 11 corridors around the country, which Mica said would cost $165 billion.
"They keep comparing this to Eisenhower, but he proposed a $500 billion highway system, and they're going to put $30 billion" in roads and bridges, he said. "How farcical can you be? Give me a break."
Administration officials and defenders of the stimulus package say that the plan should be seen as just a start of Obama's priorities, and that there will be chances to do more later, such as in the five-year transportation bill that will come before Congress this year.
"While many of the projects are a down payment on long-term goals, including energy policy reform, health-care reform and the expansion of infrastructure investment, the goal has never been to accomplish every legislative goal in one fell swoop," White House spokeswoman Jen Psaki said.
House members warn, though, that it will be hard to argue for ambitious undertakings after the stimulus package passes, and that Obama may never again have as good a chance as this to act boldly. "After this initial rush . . . a lot of people are going to begin to wonder about whether we're pushing the limits of our borrowing capacity here, and I'm afraid that when it comes time to do more robust investment . . . it will be 'pay as you go,' " DeFazio said.
The $825 billion package includes $275 billion in tax cuts, more than $300 billion in aid for laid-off workers and budget-strapped states (for food stamps, temporary health coverage, increased unemployment benefits, Medicaid funding, schools and police), expenditures that many economists agree will enter the economic bloodstream quickly and trim further layoffs by state governments.
The administration has sought to address Obama's longer-term goals with the rest of the package. To make the workforce more competitive, the plan includes $15.6 billion in Pell grants for college students, $6 billion for modernizing college buildings and billions more for expanding scientific research.
To start down the road of health-care reform, the package includes $20 billion toward what Obama says will be an eventual $50 billion investment in computerizing medical records to make health care more efficient. Health-care experts welcome the money but worry that the pressure to spend it fast for stimulus reasons could keep the new network from being implemented as effectively as it needs to be to reduce costs.
David Brailer, who oversaw health information technology under President George W. Bush, also noted that there would be few immediate hires for the work, because there is a shortage of people with the needed skills.
The potential savings in computerizing records "are pretty large . . . but they're not available if you just dump computers on doctors' desks," he said. "We thought health-care IT would be done in the context of comprehensive health-care reform, not when we were staring into this chasm. The risk is that we just end up with a bunch of technology and nothing to show for it."
The biggest long-term investment in the package is $50 billion intended to make the country more energy-efficient -- money for weatherizing government buildings and low-income housing; for expanding the electric grid to make it easier to transfer wind and solar power; and for tax credits to encourage the growth of renewable energy.
Energy entrepreneurs have particularly high hopes for a $4.5 billion investment toward a "smart grid," technology that would allow homeowners and businesses to make more efficient use of electricity. Industry insiders estimate that the money, combined with matching industry funds, could deliver the technology to nearly a third of American utility customers.
But they, too, worry that spending rapidly in search of a stimulative effect -- and without sufficiently educating consumers -- could keep the technology from meeting its full potential.
The biggest test of the administration's energy goals may come in spending the billions that have been devoted to states and cities for improving energy efficiency. To get the money out quickly, the plan sends it through a range of programs that are not accustomed to seeing funding on this scale. State energy offices that annually receive less than $100 million combined from Washington are slated to receive $3.4 billion.
In South Carolina, the state energy office is so small that its director, John Clark, answers the phone. He said his office, which receives $1.5 million per year, has put out an urgent call to state offices and school districts for energy-saving projects to use the $35 million he expects to receive. He will also have to advise the state's cities and counties, which have even less experience in big energy efficiency projects and are slated to get $35 million of their own from a separate $3.5 billion block-grant program in the package.
Rep. Jay Inslee (D-Wash.) said that he was heartened by the abundance of energy investments, but that he had been hoping for something even bolder and more transformative, such as more money toward developing lithium batteries for automobiles. He hoped that the package would be followed by further investments, but worried that this may be the last shot for a while.
"We need to think of it as a first step," he said. "The question is: Are we going to step up to the plate to sustain this effort?"
Staff writer Paul Kane contributed to this report.