Regardless of how you feel about the amount of money being spent by the government, it’s hard to deny that at least some of the stimulus spending is having a big impact on the economy. Some analysts have even gone so far as to worry that the economy would slip back into another recession if the government wasn’t spending money at such a high rate. Right or wrong, it’s clear that consumer spending still has a long way to go before it’s able to contribute as much too economic growth as it normally does.
Over the past several weeks, the focus of government spending has gone more heavily to job creation. The unemployment rate is still at 10% and although job losses seem to be slowing down, we’re probably several months away from seeing strong hiring beginning again. Here’s a breakdown on the trends in where stimulus dollars are going.
Tax Cuts: So far, more than $93 billion has been spent in the form of tax relief. These tax cuts have been aimed at both individuals and businesses but if you haven’t noticed them yet, it’s because most of the benefit being given to individuals is coming in the form of slightly less withholding in each paycheck. Critics of stimulus spending say that a consumer receiving an extra $20 in a paycheck is not a meaningful enough amount to motivate increased spending.
Corporate And Industry Bailouts: The faucet of money that has poured taxpayer dollars into banks, insurance companies, automakers, and other industries that found themselves on the brink of failure has all but stopped and many of those loans are being repaid by the borrowers. The White House announced last week that because less money is going to be spent on bailouts than was budgeted for, the difference will be spent on job salvation and creation.
Public Job Creation: There’s a fine line between saving jobs and creating jobs and sometimes numbers get thrown around by politicians that are hard to verify. It’s impossible to know how many jobs have been saved or created with stimulus spending but most of those jobs have been in the public sector. Substantial sums of money have been spent to keep firefighters, police officers, teachers, and other public servants from losing their jobs.
Private Job Creation: The next step in job creation is aimed at growing employment in the private sector and stimulus spending can do this by funding infrastructure projects that require employers to hire workers. There is almost $400 billion remaining from President Obama’s $787 billion stimulus package and a lot of this will be focused on job creation. When spending is announced for a specific purpose, interested recipients must apply before being granted the funds. Some projects that have been funded haven’t even started yet but the additional dollars could help applicants that have been denied previously receive access to stimulus funds after all.