Online at: http://politicalaffairs.net/article/view/8523

Stimulus Funds Beginning to Jump-start Economy

By Joel Wendland
Archives - Dates and Topics 2009 online May 1 – 31, 2009 click here for related stories: economy

5-14-09, 12:06 pm

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With about 12 percent of the President's economic recovery act funds distributed, some 150,000 jobs have been saved or created, according to a new report released this week by Vice President Biden, who heads the White House Task Force on Working Families.

In the next 100 days, economic recovery act programs are expected to create or save an additional 600,000 jobs. The Vice President's report also expects that some 3.5 million jobs will be created by the time the recovery act expires at the end of 2010.

The news comes as something of a silver-lining on a dismal unemployment report from the Department of Labor. The month of May saw some 539,000 jobs lost, bumping the unemployment rate to a 25-year high of 8.9 percent.

In the first two-plus months (77 days) under the recovery act, the Vice President's report showed, over 3,000 transportation projects have been funded across the country. (Data in the report covered up until May 5th.)

The bulk of the $88 billion so far injected into the weakened economy has gone to expand unemployment benefits, provide a tax cut for working families and cover health insurance premiums for unemployed workers. In addition, infrastructure projects and education programs have also begun to see new federal funds.

Federal aid for state health care programs have begun to help them avoid higher budget deficits and more layoffs. For example, Texas has drawn on more than $1 billion from the Federal Medical Assistance Program (FMAP) created by the recovery act. South Carolina, Louisiana, Minnesota and Alaska – each with a Republican governor who originally made a show of refusing economic recovery funds – have also drawn on an additional $650 million to cover medical assistance programs in their states. States with massive budget deficits like New York and California have also begun to see some relief.

In addition to FMAP, 13 states have created plans that have been approved to receive billions allocated by the recovery act through the Department of Education for education programs. The top priority of these funds will be to help schools avoid new layoffs and to keep schools open. Related programs for improving standardized tests, teacher professional development and college preparedness will see a new boost as well.

The Vice President's report also touted a handful of specific cases across the country where economic recovery act funds have already made an impact. At the top of the list was the case of Serious Materials, a California-based producer of energy-efficient windows. Serious Materials used recovery act subsidies for energy-efficient products to rehire some of the 200 unionized workers at a small Chicago factory called Republic Windows and Doors.

Republic Windows and Doors "received national attention last year," the report stated, "when workers briefly occupied the building after the former owners gave just a few days notice before Christmas that they were shutting down."

That short notice violated labor laws. Workers occupied the plant and forced the company's main creditor, Bank of America, to extend credit to the company to pay severance wages and benefits to the laid-off workers. Ironically, Bank of America had received bailout money from the TARP program to the tune of $25 billion last fall, but refused to extend credit to Republic Windows and Doors, ultimately forcing it out of business.

The president's personal support for the workers publicized the case, and programs created under his recovery act helped provided incentives for Serious Materials to expand its operations and see the Republic Windows and Doors facility as a good place to start.

In addition to this particular case, the report pointed to environmental clean-up operations in Idaho's Snake River Aquifer that will dispose of nuclear waste and create 500 jobs in the process. The recovery act's new homebuyer's tax credit has boosted the number of mortgage and title companies in Louisiana.

Construction businesses in Delaware have begun to rehire laid-off workers as contracts for transportation projects funded by recovery act money rolls in. A program for placing laid-off workers in Charleston County, South Carolina just got a new grant from federal recovery act programs and will be able to place hundreds of unemployed workers as a result.

The University of Pennsylvania just won badly needed grants for medical and scientific research that will benefit the community economically and could result in meaningful scientific advances. Additional stimulus money for US Army Corps of Engineers projects will keep the Willamette Falls Locks open on the Willamette River in Oregon to keep the flow of river traffic open there. Expanded unemployment benefits in the recovery act helped the state of Georgia avoid a large tax increase to cover its unemployment compensation obligations. The report cited a number of other specific cases as well.

The Vice President's working families task force was assigned the job of overseeing and reporting on the progress of the two-year economic stimulus program passed last February. Read the full report here.


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