Does the press have a lot on its hands these days, or what?
I’ve lost count of how many trillions of bailout money have been laid out (fortunately for all of us, Bloomberg keeps track: $8.5 trillion and counting). Layoffs are being announced in the tens of thousands in a single day. The housing market continues to collapse, as does the banking industry. We have a new administration, which has created a huge appetite for any shred of news from the White House. Those two wars in Iraq and Afghanistan still drone on. The news industry is collapsing. And Oklahoma is 20-1 in basketball (Beg pardon on this last one.)
But today, the heavy guns are out for the approaching-trillion-dollar stimulus package Obama is pushing through Congress. And it’s an impressive performance.
First, The New York Times has a double-barreled effort with its lead stories on page one today, one about the unprecedented education spending in the bill and the other on the massive health-care expenditures it contains.
The Times is excellent on both counts. On education, it reports that fully $150 billion of the stimulus package is allocated for learnin’. It puts the numbers in great context:
…a vast two-year investment that would more than double the Department of Education’s current budget…
…would amount to the largest increase in federal aid since Washington began to spend significantly on education after World War II…
…New York would be among the biggest beneficiaries, at $760 per student, while New Jersey and Connecticut would fall near the bottom, with $427 and $409 per student, respectively. The District of Columbia would get the most per student, $1,289, according to the foundation’s analysis…
And it clearly explains the potential ramifications of implementing such an enormous plan:
Critics and supporters alike said that by its sheer scope, the measure could profoundly change the federal government’s role in education, which has traditionally been the responsibility of state and local government…
The bill would, for the first time, involve the federal government in a significant fashion in the building and renovation of schools, which has been the responsibility of states and districts…
It reveals a loophole benefiting student lenders that Congress apparently didn’t want us to see, and it gives worthy critics a prominent place:
But Republicans strongly criticized some of the proposals as wasteful spending and an ill-considered expansion of the federal government’s role, traditionally centered on aid to needy students, into new realms like local school construction.
And they were joined by some education experts from across the political spectrum in wondering how school districts could spend so many new billions so fast, whether such an outpouring of dollars would lead to higher student achievement, and what might happen in two years when the stimulus money ends.
On health care, the Times is excellent, as well, reporting that the stimulus bill would create expensive new entitlements without even a public hearing to mull it over.
Altogether, the economic recovery bill would speed $127 billion over the next two and a half years to individuals and states for health care alone, a fact that has Republicans fuming that the stimulus package is a back door to universal health coverage.
I don’t know if these are back doors to universal coverage, but these policies ought to be debated in public before such huge sums are spent on them. The NYT quotes a Democrat as saying we don’t have time for such things.
The story is also just a smart rundown of how the bill would affect health-care in the country over the next couple of years.
Meanwhile, The Wall Street Journal leads its effort with a front-page look at how the vultures, er, lobbyists, are circling the $900 billion. The editing is unfortunate here, because the lobbyist part of the story is buried five graphs in to accommodate a “newsy” lede, which just muddles the piece.
That’s too bad, because the lobbying story would stand alone well. It includes an amusing battle between the asphalt and concrete industries, who are trying to influence which infrastructure projects get funded.
Concrete lobbyists want more money for such long-term projects as interstate highways, bridges and waterworks — projects that, not coincidentally, use more concrete. The asphalt industry prefers repaving and road repair that use more asphalt.
“When you have a road or highway that needs to be fixed quickly, asphalt is the way to go,” says Margaret Cervarich, a vice president at the National Asphalt Pavement Association.
I’ve got a novel idea: Get the lobbyists out of there and pick projects by need—whatever material it takes to build it.
But back to the Journal. This is also good to know:
Lobbyists for U.S. footwear makers and retailers want lawmakers to wall off their drive to scrap import taxes on cheap shoes from a competing push to lower tariffs on all imported clothing and textiles.
The shoe lobby sent a letter to congressional leaders Tuesday asking for a stimulus provision abolishing the import tax on synthetic, fabric and canvas shoes. The American Apparel & Footwear Association, the Footwear Distributors and Retailers of America and retail footwear companies say the tax can reach 67.5%.
Is it me or will making it cheaper for sweatshops in China and Indonesia to export shoes to us most definitely not help create jobs in the U.S.? Good for the WSJ for pointing out this ridiculousness, which, because it’s “free trade,” will probably find its way into the bill anyway. Anyway, we could use those tax dollars right about now. We’ve got a $2 trillion deficit to pay for!
Of course, not all the lobbying efforts are wasteful. Here’s one that would be productive:
But the firms struck pay dirt Tuesday in the Senate Finance Committee, winning a 10% tax credit for investments in current-generation broadband technology, and a 20% tax credit for investments in “next-generation” broadband, not only in rural and underserved areas but any residential area.
The WSJ pairs that story with one questioning whether all the spending is going to be enough.
All else being equal, Mr. Simonson estimated that the plan as currently formulated could create 1.8 million construction jobs in its first year. But the sector has shed 899,000 jobs from its peak in September 2006.
“There’s going to be such shrinkage in private construction projects — offices, hotels, retail, manufacturing — and also declines in state and local funded projects that I’m guessing the stimulus will just slow the decline,” he said.
Goldman Sachs economists say $1.2 trillion in fiscal stimulus is needed over two years to offset the sharp private-sector contraction.
And it’s important to note, as the paper does here, that all this spending will have effects that will in part offset any positive impacts:
The one thing that is certain to flow from the stimulus is a large increase in the federal debt. Large government budget deficits are showing signs of starting to nudge interest rates on government debt higher, from very low levels.
If that persists, it could eventually damp some of the stimulus-plan’s benefits. Higher government rates raise the cost of borrowing not only for the Treasury, but also for many private-sector borrowers, since corporate bonds and mortgage bonds are often benchmarked to Treasury yields.
Now let’s turn to the Washington Post’s A1 effort.
It has a good report on how even some Democrats are questioning the pace of the moves. This is a very interesting plan and one a lot of people could get behind:
In testimony before the House Budget Committee yesterday, Alice M. Rivlin, who was President Bill Clinton’s budget director, suggested splitting the plan, implementing its immediate stimulus components now and taking more time to plan the longer-term transformative spending to make sure it is done right.
“Such a long-term investment program should not be put together hastily and lumped in with the anti-recession package. The elements of the investment program must be carefully planned and will not create many jobs right away,” said Rivlin, a fellow at the Brookings Institution. The risk, she said, is that “money will be wasted because the investment elements were not carefully crafted.”
And this seems about right to me—so much of the program seems to be going into extant programs at the expense of investments like high-speed rail that will transform the economy:
For some House Democrats, the problem is less a matter of balancing the short and long term than a shortage of focus and will on the part of the administration. Their disappointment centers on the relatively small amount devoted to long-lasting infrastructure investments in favor of spending on a long list of government programs. While each serves a purpose, the critics say, they add up to less than the sum of their parts, and fall far short of the transformative New Deal-like vision many of them had entertained.
And it quotes a Republican saying that only $30 billion of the stimulus plan is for roads and bridges, which are seen as relatively quick ways to boost the economy and help long-term productivity by fixing our decaying infrastructure. The Post presents a pretty compelling case that a ginormous spending bill like this needs to be done with more care. Splitting it into two spend now/spend a little later bills seems like a winner.
But to circle back around to my main point, the press has put on an excellent show today covering a critical nexus of the government and economy. It’s going to be a months- and years-long story.
Dig in.Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at firstname.lastname@example.org. Follow him on Twitter at @ryanchittum.