How people view the federal stimulus legislation — the American Recovery and Reinvestment Act of 2009 — largely depends on their comfort zone on the political spectrum.
Toward the right, the talking point has been that "the stimulus was a failure," merely adding some $1 trillion to the debt, interest included, without fixing what ails the economy.
On the left side, the argument has been that it was necessary to avert the fiscal collapse of very important government services, at worst leaving the vulnerable destitute.
Ed Kemp, a certified public accountant, is a member of a Hawaii panel tapped to oversee the spending of about $1.8 billion in ARRA funds here. Kemp holds the conservative view, but he doesn’t quite tilt to the extreme. It may have bought us time, he said.
"I’m about to say something nice about the stimulus, which is hard for me to do," he said. "Perhaps it gave people an opportunity to think about the adjustments that have to be made. It provided a cushion for a temporary period.
"My concern is, at what expense? We’ve overspent and overexpended for years, and it’s going to take years to fix it."
The state is in the last quarter of the Stimulus Game, with roughly three-fourths of the alloted ARRA dollars out the door. Former lawmaker Kate Stanley chairs the Legislative Federal Economic Stimulus Program Oversight Commission, which will continue working through December and prepare a final report.
She sees the commission’s job as overseeing ARRA’s execution in Hawaii, but about the importance of the stimulus itself she has no doubts.
"It saved the state of Hawaii’s Medicaid program, it saved teaching positions," Stanley said. "That infusion of federal money allowed the state to continue those services."
Mark Anderson is the state’s lead ARRA coordinator and heads the Office of Economic Recovery and Reinvestment in the state Department of Budget and Finance.
Many people don’t understand the range of purposes the stimulus covers, Anderson said: It includes tax breaks, a boost in social benefit programs and construction, as well as special allotments for specific agenda items, such as the Race to the Top educational grants, broadband Internet expansions and renewable energy development.
The money went out through a total of 188 awards. Some of the biggest chunks were carved off for benefit programs such as unemployment (about $364 million) and the Federal Medical Assistance Program (about $507 million), of which Medicaid is the largest part.
Much of Anderson’s job since ARRA was enacted in February 2009 has centered on seeing that the progress of the grants were openly trackable and that he got feedback on the number of jobs funded by the stimulus in each quarter. The peak came last year, in the July-September quarter, when ARRA funds underwrote more than 5,000 full-time-equivalent positions.
The law required job counts only for its itemized construction projects and various programs — 178 grants, including 38 capital improvement projects, for a total of $484.4 million. Overall, however, the Obama administration’s Council of Economic Advisers applied a formula to add together all the jobs, including those created by the ripple effect of spending in the economy. At the end of 2010, that cumulative total stood at 13,000.
Construction amounted to only about $283.6 million of that, and Stanley thinks that sector should have been bigger. She added that the way jobs were counted was confusing.
But her critique basically ends there. Stanley bristles when she hears people say the stimulus should have averted the levels of unemployment that’s still afflicting the country.
"That’s hindsight," she said. "People didn’t think the economy would have been quite in this trough."
Honolulu economist Paul Brewbaker takes a measured view of the stimulus. The argument that it accomplished nothing, he said, doesn’t reckon with the fact that it was a key part of the national response to the reality of global equity markets in freefall, a phenomenon that began to reverse in the month after the law was enacted.
"It’s just so implausible that it could not have mattered," he said.
But he’s less sanguine about some of the spending targets — were clean-energy and broadband projects really the best way to get an infusion of cash to the economy? — even though he acknowledged that it’s not surprising a new presidential administration would try to use the ARRA vehicle to move its agenda.
As for the Hawaii stimulus, Brewbaker thinks the policy decision in the waning years of the Lingle administration to trail out the spending over so long a period defeats the purpose of a stimulus: spending at the moment when the private sector can’t. These unfinished construction projects were not meant to be competing with private-sector work now that Hawaii’s economy has begun its recovery, he said.
Part of the problem, he said, is that Hawaii didn’t do enough to get projects ready in anticipation of a stimulus bill. The month after the law passed, Brewbaker was traveling on the mainland and saw "this is an ARRA project" signs already up on fairly major projects.
In Hawaii, he said the first such sign he spotted was a year later, and it was only a re-do of the concrete pad at a Bishop Street bus stop.
"This is Hawaii, banana republic of the U.S.," he observed wryly. "You had to know what was going to happen."
Kemp’s chief complaint stems from his bottom-line analysis that the debt ditch has been deepened and the economy is still pale and sickly.
"It didn’t work, in my opinion," he said. "We still have 9.2 percent unemployment. It might have been worse, I don’t know.
"But we have to weigh the fact that we’re using a Band-aid to fix a problem that is no fault of our children and future generations but we’re using their resources," he added. "It’s not fair, in my opinion. We should learn to live within our means."
Anderson said critics may not be acknowledging how much worse Hawaii’s experience of the past two years would have been otherwise. Expecting the state government to turn on a dime and, without help, deal with crushing deficits would have been unrealistic, he said.
The stimulus program was a first on several fronts, Anderson added, including its transparency — which the public deserved but which opened it to criticism on some of its elements.
"The bill started out narrower, on infrastructure, but by the time the bill came out of Congress it was exceptionally wide," he said. "It was a big compromise."
State and federal governments now understand better how these operations should be coordinated, Anderson said, but reality can never approach perfection.
"In passing that next stimulus bill you still have to go through Congress," he said, "and you’re still going to get compromise."
