By Michael A. Fletcher
Washington Post Staff Writer
Monday, February 16, 2009
The economic stimulus package dramatically ramps up spending for a broad array of social programs for needy Americans in a way not seen since the launch of the Great Society programs.
"We are seeing a paradigm shift," said Paul L. Posner, a former Government Accountability Office official who teaches at George Mason University.
The bill includes billions in new money for food stamps, expanded child care and services for the homeless. It funds long-sought increases in education funding for low-income and special education students, new refundable tax credits for low-income workers, stepped-up job training, expanded health-care coverage, and an increase of $100 a month in unemployment insurance.
All of the new spending is temporary, with most of it slated to end after two years. And given the nation's bleak budgetary outlook, even many supporters of the programs say there will be no option but to roll back the increases once the immediate economic crisis passes.
At the same time, many of the new initiatives dovetail with the policy goals of President Obama and congressional Democrats, who have talked about the need to rebalance the nation's economy so more benefits flow to middle- and low-income Americans, whose incomes have stagnated. Some analysts think the increases will prove politically difficult to pare back once the initial round of funding expires, and they see the stimulus package as part economic shock treatment, part social policy transformation.
The White House says Obama plans to sign the stimulus into law tomorrow during a visit to Denver.
All the final numbers related to social spending have yet to be compiled from the 1,100-page bill, but analysts say this much is clear: The measure promises unprecedented increases in support for social programs, many of which have not seen significant funding boosts for decades. And the outlays promise to expand the role of the federal government in the nation's economy -- at least in the short term.
Obama and his administration have defended the moves as necessary to counter the steep economic downturn. With the nation shedding jobs at a rate of 600,000 a month, they say the social spending in the stimulus will help the economy by cushioning the blow felt by the most vulnerable citizens. They say it will also encourage spending by unemployed and low-income people while expanding opportunities for education and job training, which should, in turn, save and create jobs at the state and local levels.
"This plan will ensure that Americans who have lost their jobs through no fault of their own can receive greater unemployment benefits and continue their health-care coverage," Obama said at a news conference last week. "We will also provide a $2,500 tax credit to folks who are struggling to pay the cost of their college tuition, and [$800] worth of badly needed tax relief to working- and middle-class families. These steps will put more money in the pockets of those Americans who are most likely to spend it, and that will help break the cycle and get our economy moving."
Advocates for low-income people agree. Sharon Parrott, director of the welfare reform and income support division of the Center on Budget and Policy Priorities, said aid to people who are struggling "is the best stimulus" because they are all but certain to spend it quickly. Still, she said, it would be impossible for the level of funding for the broad range of social programs in the stimulus to continue beyond the two-year timeline in the legislation. "Even if something would be overall good policy, it needs to be in the budget, and you need to pay for it," she said. "There are real budget constraints that prevent that going forward."
Danielle Ewen, director of child care and early education policy at the Center for Law and Social Policy, called the stimulus's social spending essential to helping lower-income Americans regain their economic bearings. "It is about getting people to work and making sure they can afford basic things to keep their families safe and secure," she said.
But some critics see the stimulus package as a Trojan horse that will provide historic funding increases to many programs in a way that will prove politically difficult to stop once the nation emerges from its economic tailspin.
"What you have here is a pretty cynical attempt to take their agenda and wrap it up in a bow of stimulus and get it out the door before anybody knows what's going on," said Robert E. Rector, a senior research fellow at the conservative Heritage Foundation who has been called the "intellectual godfather" of welfare reform. "You are creating new entitlements that are not likely to go away."
Rector and other conservative critics have called the measure an undoing of welfare reform, saying it eliminates financial incentives for states to reduce welfare rolls. "They have got their foot in the door for a massive permanent expansion of welfare through this stimulus measure," Rector said.
The Obama administration and advocates for the poor dismiss that critique, saying the increased funding for welfare-type programs will get the nation through the depths of the economic crisis. "People need to have a bridge over troubled waters," said Corey Ealons, a White House spokesman.
The stimulus increases spending for a wide range of programs targeting lower-income Americans. It raises federal spending for schools that serve largely low-income students from $14 billion to more than $27 billion. Federal support for special education, an area where local school districts have long complained of inadequate federal support, will grow by more than $12 billion. Funding for Pell Grants, which provide college aid for low-income students, will increase by around $15 billion, allowing the maximum grant to increase by $500 to $5,350.
In all, the bill will increase spending on "means-tested" federal programs by more than $250 billion over two years, according to a calculation by Rector and Katherine Bradley, another researcher at the Heritage Foundation.
One of the biggest beneficiaries will be education, which stands to gain about $100 billion for programs targeting students from pre-kindergarten through college. The measure will create new preschool slots for low-income students, create pots of grant money aimed at spurring public school reforms, and bail out states facing deep cuts in education spending because of budget deficits.
Obama has described the increases as serving a dual purpose: averting layoffs in schools across the country while investing in students, which he says will yield long-term economic benefits. While the new money is certain to prevent some state budget cuts, few advocates are calling it a long-term victory for education because they worry that the money will not last.
"The federal government doesn't have this much money for a long time," said Amy Wilkins, vice president for government affairs at the Education Trust, which advocates for improving education for disadvantaged students. "At some point, we are going to have to rein ourselves back. There is going to come a reckoning. Two years from now, we could be pushing these kids and schools off a financial cliff."
Not everyone shares that view. Frederick M. Hess, director of education policy studies at the conservative American Enterprise Institute, is among those who say Obama and congressional Democrats will be under pressure not to dial back the new education spending once the stimulus expires in two years.
"What we've seen in the education community is very quickly they set out new markers, and this could be regarded as the new normal," Hess said.