NCPA - National Center for Policy Analysis

STIMULUS OR SPENDING?

February 3, 2009

A question surrounding the new economic "stimulus" package is whether it is truly stimulus or just spending, says Terry Neese, a distinguished fellow of the National Center for Policy Analysis. 

  • According to the Congressional Budget Office (CBO), only 7 percent of the stimulus spending ($358 billion of the total) will be spent this year.
  • By the end of 2010, only 38 percent will be spent; and by the end of 2011, only 67 percent.

But many of the items included in the package make it lean more toward spending, says Neese:

  • At least 32 new government programs will be created at a cost of over $136 billion.
  • At least 150 different federal programs, ranging from Amtrak to the Transportation Security Administration, will see their budgets expanded; the total cost of this piece is almost as much as the annual discretionary budget for the entire federal government.
  • The bill will cost each household $6,700 in additional debt; yet, it will provide enough spending to give $2,700 to every citizen, and enough to give every person living in poverty $22,000.

Much of the funding will go to programs that already have large, unexpended balances, says Neese.  For example, the bill provides $1 billion for Community Development Block Grants (CDBG) -- a program that already has $16 billion on hand. 

But only a scant 2.7 percent, or $22.3 billion, is dedicated to small business tax relief.  Almost one-third of the "tax relief" in the stimulus bill is spending in disguise, meaning that true tax relief makes up only 24 percent of the total package -- not the 40 percent that President Obama had requested, says Neese.

Source: Terry Neese, "Stimulus Package Will NOT Help Small Business," Terry Neese Blog (National Center for Policy Analysis), February 2, 2009.

 

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