Federal dollars create jobs in Obama’s gamble

About $50 billion of the $787 billion economic stimulus bill is being spent on highway projects across the nation. Already more than a dozen states — including Kansas — have said exactly how they will spend the money they have received.
Estimates are that as many as 400,000 jobs will be created or saved.
To put that number into perspective, Mike Gibson, the executive director of the trade group Associated Contractors of New Mexico told a New York Times reporter his state had lost 4,500 highway construction jobs in the last year. That many and more will be hired in his state to do stimulus-funded work, wiping out the job loss.
These will be 400,000 well-paying construction jobs that would not have been created without the federal money. Every state has cut back due to the recession. Highway departments are hit hardest because almost all of their projects can be postponed. So it is no exaggeration to say that almost every penny of that $50 billion will go into the economy quickly and that the jobs created will offset some of those lost in other
sectors.
These specific numbers demonstrate how this fraction of the total program is working.
Another $86 billion chunk of the program supplements the federal portion of the states’ Medicaid budgets.
Medicaid payments to health care providers flow into every community in every state. They help pay the salaries of health care workers and help cover the expenses of every health care facility. Medicaid is the fastest growing segment of state budgets. In low-income areas such as ours Medicare and Medicaid payments make up a very large share of all heath care income.
Because the program provides health care to those with low incomes, the demand on it grows as the recession worsens. Health care jobs are created to handle the increased burden created by job losses and cutbacks in hours worked, and because the federal share has increased, the states can raise their Medicaid budgets even though their economies have shrunk and other state income has diminished, so jobs that otherwise would have been lost nationwide in the health care industry will be preserved.
What is true in the highway and Medicaid sectors is repeated in education and the other sectors of the economy to which the stimulus money is flowing.

THE PRIMARY criticisms of the package are that it is using borrowed money which must be paid back and that it is increasing the role of the federal government in our society.
Both are true statements. Neither, however, takes all of the factors into consideration. The government is printing the money and increasing the already-exploding national debt because a majority of the nation’s leading economists estimated that doing so would be less expensive in the long run than allowing the economy to descend into another great depression.
Nobody likes the idea of borrowing so much money. Doing so can be justified only if the stimulus works and the economy recovers quicker than it would have otherwise. That outcome can’t be guaranteed. But doing something seemed better than doing nothing. And only the federal government could borrow money in the volume required.
So Washington takes a bigger role than it had. But the feds aren’t telling the states or individuals what to do, they’re merely supplementing state income with federal income. Kansas, et al, still run their transportation departments and administer their Medicaid programs, etc., etc., etc.
When the economy recovers — and it will — state revenue will start growing again and the ratio of state to federal spending should return to pre-recession levels. And of course that will happen because Congress is hardly likely to borrow another $787 billion in 2011 to scatter around.
The federal role will expand in the business sphere because the administration and majorities in Congress are determined to re-regulate banks and the other players in the credit industry to prevent a repeat of the fiscal collapse that caused the mess we, and the rest of the world, are in. To do so is not socialism; given today’s economic scene, it’s survivalism.

— Emerson Lynn, jr.