A Stimulus Plan: Its All About Job Creation
The business news is pretty bleak these days, and on a number of fronts.
There have been scary headlines concerning the restaurant sector, hotels, retail, the auto industry and just last week came the stunning news that Brandeis University, facing a huge hit to its endowment and calamitous losses from the Madoff scandal, is actually selling the collection in its art museum for more than $300 million.
But the most disturbing news concerns jobs.
Analysts called Jan. 26 Bloody Monday, because more than 70,000 jobs were lost on that day alone. Another 11,000 cuts were announced the following Tuesday. Locally, the jobless rate in the Greater Springfield area climbed to 7.2% for the month of December, up a full percentage point from November.
Job losses are critical because when people are out of work or fear that they soon will be they become more cautious and conservative in their spending. This leads to reductions in production in factories, the closing of restaurants and hotels, and shrinkage among some major retail chains.
This leads to more layoffs, which puts more people out of work and prompts even more to fear that they may face a similar fate, which leads to reductions in production in factories you get the idea.
All this underscores why the stimulus plan being discussed on Capitol Hill must create jobs right now, this quarter.
However, some early details about whats in the plan show that only a small percentage of the money in the package will be spent this year
Specifically, of the $30 billion the House bill allots for highway projects, for example, less than $4 billion would be spent before 2011. And of the $18.5 billion earmarked for renewable energy, less than $3 billion would actually be spent within two years.
While there are widespread questions about the relative worth of any stimulus package of this type, one has to doubt whether one with such delayed action will help stem the tide of job losses and resulting negative impact on virtually every sector of the economy.
Instead, proceeding with such a package would amount to simply throwing money at the problem, which every analyst has warned against especially when one considers the sky-high levels of debt the nation is absorbing and President Obama insists is not the case.
Its not too late to retool this plan and forestall more of the announcements like the one Mass. Gov. Deval Patrick made recently. He unveiled a $1.1 billion round of emergency budgets including large reductions in local aid that will lead to reductions in service, tough times at public colleges and universities at a time when applications to those institutions are soaring, and, most importantly, thousands of layoffs.
As we wrote recently, giving Patrick a check for $2 billion today will do a lot more good than putting $2 billion into a troubled bank that will likely keep it in the vault, or targeting $2 billion for a green energy development that wont put anyone to work for two years, when the recession will presumably be over.
At a time when colleges are selling their art collections to raise cash, drastic steps must be taken to restore confidence, keep people working, and put people laid off on Bloody Monday back to work.
Time is of the essence when it comes to a stimulus package, but its more important to get it right than to get it done fast.