White House to issue progress report on anniversary of economic stimulus

By Alec MacGillis
Washington Post Staff Writer
Wednesday, February 17, 2010

The White House is releasing its first annual report on the American Recovery and Reinvestment Act on Wednesday, summarizing its progress on the first anniversary of President Obama's signing of the massive, politically contentious economic stimulus package.

The $787 billion bill was a classic rendering of the precepts of economist John Maynard Keynes: With employers laying off workers, credit drying up and consumers battening down, the theory went, the government needed to do all it could to inject demand.

But even with most economists agreeing on the need for the stimulus, the package was politically fraught from the outset. Republicans charged the White House with letting congressional Democrats lard up the bill with pet priorities, although the bill's emphasis on education, energy and health care mostly reflected Obama's long-term agenda.

Liberals argued that the package was not big enough, especially given that $70 billion went toward a temporary patch for the alternative minimum tax, which was not seen as a stimulus to the economy.

The White House has acknowledged that its economists argued for a bigger package, but it maintains that the bill passed was the most politically feasible one. The measure got no Republican votes in the House and squeezed through the Senate with three GOP votes.

The stimulus has since become more controversial among the American public. Independent arbiters such as the Congressional Budget Office agree that it helped end the recession and added several percentage points to GDP growth, and that it created or saved at least 2 million jobs.

But with job losses far deeper in 2009 than the administration expected, the stimulus has not kept unemployment from climbing to 10 percent. Republicans have seized on job-creation tallies reported by stimulus recipients, questioning their reliability.

At the same time, Republicans who voted against the bill, as well as Democrats, have touted stimulus spending in their districts.

The package was divided into three main categories:

-- Tax cuts (including $800 for both 2009 and 2010 for most families).

-- Payments, including fiscal aid to states and expanded safety net assistance (such as unemployment benefits, COBRA subsidies and food stamps).

-- Investments in, for example, public infrastructure, energy efficiency upgrades and broadband access.

While much of the investment spending has been slow to ramp up, administration officials say the initiative is on track, with 70 percent scheduled to be spent by October. With most of the state aid and safety net benefits already out the door, the spending will now shift more toward investment projects.

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