A Look At Effects Of Stimulus On States

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Eight months after President Obama signed the federal stimulus funding into law, states are seeing the money flow now. A health clinic in a low-income part of Nashville, Tenn., teachers in California and highway construction workers in Illinois were among the beneficiaries.

ROBERT SIEGEL, host:

States have just filed their first reports accounting for how they've spent federal stimulus money, and we're going to hear now about projects in three states, California, Illinois and first Tennessee. Blake Farmer of member station WPLN reports on a new health clinic in Nashville.

(Soundbite of crying baby)

BLAKE FARMER: Nearly every seat is taken in the waiting room of this clinic on the south side of Nashville where, in Tennessee, close to $17 million have gone toward making more clinics like this one and even paying the salaries of nurses and doctors.

(Soundbite of waiting room)

FARMER: Dr. Suzette Kelly rolls her laptop cart into a square room where a five-year-old girl swings her feet off the end of an exam table. Her mother explains she's come for a flu shot. Kelly checks a few vital signs for good measure.

Unidentified Woman: Ear.

FARMER: Kelly's position is one of 23 created since Nashville's United Neighborhood Health Services took stimulus funding earlier this year. The organization runs more than a dozen clinics in schools and community centers. Kelly was hired in August after being downsized from a local pediatric practice.

Dr. SUZETTE KELLY (Physician): They were cutting back on their physician population.

FARMER: They just couldn't support it financially?

Dr. KELLY: I guess they couldn't support it financially.

FARMER: Kelly says she's thankful to have a stimulus job and there's plenty to do. The clinics have seen a nearly 15 percent bump in patients since accepting recovery money. Tennessee's share of stimulus funding is $5.6 billion. As the money trickles in, the state says it's created or saved nearly 8,000 jobs. Besides new hires, United Neighborhood Health Services plans to expand two clinics. Next week, it opens an entirely new space in the Edgehill community, within walking distance for Tina Hamilton(ph).

Ms. TINA HAMILTON: I mean you don't have to worry about any bus fare. And if you don't have any money, you can just walk up the street.

Ms. MARY BUFWACK (CEO, United Neighborhood Health Services): We're going to serve the people who live just 20 feet away from us.

FARMER: Mary Bufwack directs the nonprofit agency. She says some health stats in this neighborhood of subsidized housing were on par with third world countries.

Ms. BUFWACK: Low birth weight in this community is as high as 20 percent. So we have all of those babies, one out of five, being born that often needs extra hospitalization.

FARMER: Bufwack says it will take time for this two room brick-o-block clinic to build a sustainable patient base. Breaking even requires her to attract one insured patient for every uninsured, which is a growing challenge.

Ms. BUFWACK: We feel a lot of pressure. If these clinics don't quickly get up to maximum and really become self-sustaining at the end of two years, we don't even want to think.

FARMER: Bufwack says she's committed to making the new clinic work and keeping the additional staff, even after the stimulus money runs out.

For NPR News, I'm Blake Farmer in Nashville.

RICHARD GONZALES: This is Richard Gonzales in San Francisco.

Across California, the federal stimulus money had a big impact on the public schools and colleges. It saved or created at least 60,000 positions, most of them teaching jobs. That includes five faculty spots here at the International Studies Academy.

(Soundbite of school bell ringing)

GONZALES: This small school with less than 500 students offers intensive study of language and international relations. The students are predominantly African-American and Latino - more than half qualify for a free lunch.

Mr. CHRISTOPHER CAREY (Teacher): All right, so everyone get their reading out for Mapp v. Ohio.

GONZALES: Third year teacher Christopher Carey(ph) opens his American democracy class with a landmark Supreme Court case about unreasonable searches and seizures.

Mr. CAREY: What would you, if anything, would you think was unreasonable in the search of this woman's house? What was unreasonable?

GONZALES: San Francisco schools got about $24 million in federal stimulus money, and Carey, a 33 year old Stanford grad, former actor and paralegal is fairly typical of those who are working only because of the federal assistance.

Mr. CAREY: What I like about this job is that I get to be with kids all day. They're a great energy. I left a job as a paralegal that was, you know, I think I took a $25,000 pay cut to take this job, but it's what I wanted to do.

GONZALES: Even so, Carey says, there are days he goes home emotionally drained from helping his students navigate life outside of school, where they face broken homes, drugs, and violence - all of which, he says, makes his payoff that much richer.

Mr. CAREY: Helping a kid fill out a college application because no one at home can is just an incredibly rewarding experience. And then when those kids come back and say thanks or just come back and, you know, they don't even have to say thanks. If they're doing something cool with their life, that makes me feel great.

GONZALES: California isn't the only state where teachers' jobs were saved or created with federal stimulus money. It happened in Utah where 2,600 teaching jobs were spared, Minnesota saved about 5,900 and Michigan salvaged 14,000 school jobs. But what happens when the stimulus money dries up? Bill Jackson is president of GreatSchools, a national organization promoting parental involvement in schools.

Mr. BILL JACKSON (President, GreatSchools): The federal stimulus money was great, but the problem is we run the risk that that money lets us put off critical and difficult decisions about how we're going to fund education in California and beyond.

GONZALES: In San Francisco, officials are looking at increased class sizes, program cuts and maybe a longer school day. Teacher Christopher Carey tries to take in all in stride. After all, he says, as a young teacher, he never knows whether he'll have a job next year.

Richard Gonzales, NPR News, San Francisco.

SIEGEL: So, we've heard how some stimulus money has been used in California and before that in Tennessee. Finally, we got out on the road in Illinois, with NPR's David Shaper.

DAVID SHAPER: It's a cold blustery October day and that means we're getting close to the end of the highway construction season here in Chicago. But there are still a few stimulus projects being finished up. One of them is here on the Bishops Ford Expressway, interstate 94 through Chicago's South Side and south suburbs. And this project has kept dozens of people employed this year.

Mr. GUADALUPE ELANIS(ph) (Labor): Well, everybody thought of that, you know, everybody thought there won't be no work this year, you know.

SHAPER: Laborer Guadalupe Elanis is working for Gallagher Asphalt on this expressway resurfacing project. He says work prospects looked bleak back in January, but because of the stimulus project he's been able to provide for his family.

Mr. ELANIS: What can I say, man, it has been good year for me, you know? Some other people, it's not the same, you know? For me, I'm doing okay.

Mr. CHARLIE GALLAGHER (President, Gallagher Asphalt): The stimulus package has been certainly a job-sustaining bill for us. But it also has helped us hire a few new people as well.

SHAPER: Charlie Gallagher is the president of Gallagher Asphalt. Gallagher won bids for seven stimulus projects, putting close to 300 people on his payroll at the peak of the construction season this summer - 150 of them on this job alone. Most years, he says about half of the company's revenue comes from public projects, half from private, such as building roads for subdivisions or parking lots for new strip malls. But this year, Gallagher says that kind of private sector work dropped off to almost nothing. And he says public projects, including those funded by the stimulus now make up more than 98 percent of his company's business.

Mr. GALLAGHER: Without it, we would have been very, very severely impacted.

SHAPER: Even with the stimulus, Gallagher says he has fewer workers this year, many are working fewer hours and this construction season has been shorter than usual.

Mr. GALLAGHER: It was a shot in the arm, but it's not a sustaining shot in the arm.

SHAPER: Gallagher and many other highway contractors are now more worried about next year than they were at the start of 2009, which at the time look bleak at best. The Illinois Road and Transportation Builders Association says as important as the stimulus was, it did not provide as much money for infrastructure projects as hoped. The last massive six year federal transportation's spending plan has expired with no replacement in sight. Highway construction contractors say if there is no reauthorization of that transportation built soon, many of them could be put out of business.

David Schaper, NPR News, Chicago.

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The Political Battle Over Counting Stimulus Jobs

A National Park service worker breaks rocks at the Grand Canyon as part of a stimulus project i

National Park Service trail crew member Tim Walters breaks rocks in the Grand Canyon National Park while working on a projected funded by federal stimulus dollars. New figures show that the stimulus bill has created more than 30,000 private-sector jobs. John Moore/Getty Images hide caption

itoggle caption John Moore/Getty Images
A National Park service worker breaks rocks at the Grand Canyon as part of a stimulus project

National Park Service trail crew member Tim Walters breaks rocks in the Grand Canyon National Park while working on a projected funded by federal stimulus dollars. New figures show that the stimulus bill has created more than 30,000 private-sector jobs.

John Moore/Getty Images

The U.S. government has offered some early data on the $787 billion stimulus program, reporting that federal contracts worth some $16 billion have saved or generated more than 30,000 private-sector jobs so far.

The number represents the first hard count of jobs tied to the stimulus, but it is preliminary and covers only a tiny portion of the overall spending. A more comprehensive count will be released on the government's Recovery.gov Web site at the end of October, though the bulk of stimulus money still has yet to be spent.

Of course, none of this will stop Democrats or Republicans from trumpeting the success or failure of the program. The stimulus has become ground zero for the political battle over jobs, which is shaping up to be one of the most important political issues for next year's congressional midterm elections.

The Obama White House quickly issued a statement Thursday from its chief economist, Jared Bernstein, saying that this direct count of jobs created by private businesses receiving federal contracts "exceeds our projections" and helps bolster its analysis that the stimulus program has created or saved about 1 million jobs in its first seven months.

"They can do whatever analysis they want, but things are not going the way they forecast," says Diana Furchtgott-Roth, who served as chief economist at the Labor Department during the Bush administration and now runs the Center for Employment Policy at the conservative Hudson Institute. "In those areas where the stimulus money is supposed to be going — infrastructure and social services — we're not seeing an effect, and we are seeing a continuing decline in employment."

House Minority Leader John Boehner (R-OH), who has hammered on job losses on a near-daily basis, echoed her sentiments on Fox News, saying, "Three million Americans have lost their jobs since this trillion-dollar stimulus bill was signed into law."

Obama officials rejected that analysis. "No one ever believed that there is any stimulus act, any conceivable legislation, that could have completely offset the deepest recession since the Great Depression," the White House's Bernstein told NPR's Brian Naylor. "This act is clearly offsetting some of the pain. That's all we've ever said it could do."

So Who's Right?

Economists on both sides of the debate agree that the actual number of jobs created by the stimulus package will likely never be known. Large swaths of stimulus money went to provide tax relief, extend unemployment benefits and provide fiscal relief to beleaguered state government budgets. These programs have largely indirect effects on employment.

Only about a third of the stimulus funds — some $275 billion — are going to grants, contracts and loans that will be tracked on Recovery.gov. The 30,000 jobs reported so far cover only direct contracts, which represent $16 billion of that total.

But these numbers are still important politically. Republicans have made the jobs issue a centerpiece of their attacks on Democrats, while the Obama administration is under pressure to demonstrate that its policies are having a real impact.

"It matters enormously, which is why we're seeing this approach of bringing out numbers as quickly as possible and as often as possible to show tangible results for the bill," says Douglas Holtz-Eakin, a former director of the Congressional Budget Office who served as the top economic adviser to Arizona Republican Sen. John McCain's presidential campaign. "I don't think this is going to win the political battle. This is a really weak number."

Meanwhile, many Democrats are worried that the piecemeal reporting of these numbers could backfire for the Obama administration, because the early figures are so small.

"This administration is bending over backwards to be transparent, but in the end, it may be political jujitsu, because it's so hard to document these various effects," says Lawrence Mishel, an economist who runs the Economic Policy Institute, a liberal think tank. "Even the people who are the winners from this don't necessarily know it."

Mishel notes that many economists, including those at Goldman Sachs, estimate that the stimulus package lifted the U.S. economy by between 2 and 3 percentage points in the second and third quarters of 2009.

In other words, "if gross domestic product shrank by 1 percent in the April-May-June period, it would have fallen by 4 percent without the recovery package," he says. "The plain facts are we've been losing jobs, but we've been losing them at one-third the rate we were losing them at the beginning of the year before the recovery package."

Tough To Brag About What Was Averted

Still, even most Democrats acknowledge that this is a very tough political message to sell.

"Nobody wants to hear the spin about what would have happened or what could have happened," says Brent Budowsky, a Democratic strategist. "They want to know what's happening."

Some Republicans make the case that the stimulus package has actually hurt the economy overall because the extra spending is fueling even larger budget deficits. "We can conclude that the stimulus did more to harm the economy than help it," says Furchtgott-Roth. "People are concerned about these massive borrowing increases and the massive tax increases, and this makes them less willing to spend and less willing to invest."

Not all the critics go that far. Holtz-Eakin says the bill was "badly designed," but is having some sort of effect. "It's impossible to have that big a fiscal policy and have no impact on the economy," he says. "The big question has always been: Are we getting our money's worth out of this?"

While the political fight over the stimulus will continue in Washington, strategists for both parties say the nation's unemployment rate, which currently stands at 9.8 percent, is the figure to watch. Most economists expect that it will hit 10 percent in the coming weeks or months, a milestone that many observers expect will trigger another set of political attacks.

"That number is a political inflection point that is coming momentarily," says Budowsky. "Politically, when that number flashes across the screen, the political system will explode. The symbolism merges with the reality in people's lives."

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