More than half of all Republicans in the House and nearly half in the Senate happily took credit in their home districts for the stimulus money they voted against.

As of the end of August 2010, $289.4 billon has been paid out to the states.  Many Americans think that at least half the money has been wasted.  Economists have a higher opinion, but no one thinks it is a home run. 

The big concern of Americans is the high unemployment numbers.  We seem stuck in the 9.5% range, but what people don’t realize is that every year, 1.8 million new workers enter the Civilian work force, and just filling these jobs leaves the unemployment rate stuck.  

Many agree the stimulus bill has created jobs.  Economists say it has generated salaries for as many as 2 million workers who would have been out of work without the stimulus, and the government on Recovery.gov points to nearly 750,000 jobs funded by the bill. 

The nonpartisan Congressional Budget Office calculated that the stimulus package saved or created between 900,000 and 2.3 million jobs.

Although the Republicans point to tremendous job losses, it would have been 2 million jobs worse without the stimulus that they voted against as a bloc.

These paychecks, in addition to unemployment benefit extensions and tax cuts have all done their part to advance the economy.  But with only about 35% of the stimulus money spent, it is difficult to say whether it will work or not.

Before the stimulus bill was passed, unemployment insurance was cut off at 26 weeks.  After that time, unemployed workers were dropped from the Civilian labor force unless they had looked for work in the previous 4 weeks.  If they said they had looked for work in the last 12 months, they were considered marginally attached to the labor force.  As of the end of August 2010, there were 2.37 million workers in that category.  Within the marginally attached workers, were 1.1 million discouraged workers, who are no longer looking for work.   

The stimulus bill extends unemployment benefits to 33 weeks, and raised the government payment by $25 per worker per week.  Under the stimulus bill, the government also provides 65% of health insurance cost for the workers for up to 9 months after separation.  This provides much of the employer cost portion that ceased when their jobs were terminated. 

Economists have long expressed that unemployment benefits are a core motivation for economic stimulus by giving people some small discretionary income.  One of the possible side effects is that the financial “cushion” encourages workers to spend their efforts to find an “ideal” job rather than the first one that comes their way. 

In another job-saving effort, stimulus money has been sent directly to states and local governments to help them balance their budgets and avoid mass layoffs of teachers, police officers and firefighters, since states are restricted from deficit budgets. 

Instead of deficits, states and local governments raise cash through the sale of municipal bonds.  During the recent financial crisis, the bond market froze, forcing the municipal issuers to face big budget cuts and cancel programs.  Under the Build America Bonds program, the federal government subsidizes bond payments made to investors, raising the yield to very attractive rates, stimulating the economy and lowering the municipality’s borrowing costs. 

Close to half of the stimulus funded jobs are those that keep states and local governments running.  Those salaries provide money that families can spend into the economy.  

To encourage home sales in an economic sector that was at the heart of the financial meltdown, first-time homebuyers were offered an $8,000 tax credit until the end of November 2009. 

Although home sales rose during much of 2009, as soon as the tax credit expired, home sales plummeted.  The analysis was that people who would have purchased a home anyway moved up their purchase date to take advantage of the tax credit.

There are huge numbers of programs being funded simultaneously in the stimulus bill.  Many of the programs are slow to mature and show benefits.  These are investments in the country’s future rather than a stimulus. 

The stimulus bill provided $100 million for improving and repairing infrastructure items like roads and bridges sorely needing those repairs.  It would also put people to work.  This was the image of the stimulus presented to Americans, and it stuck.  It was, however, a proverbial “drop in the bucket.” 

Although money was allocated for “shovel ready” building projects, there weren’t that many projects ready to go, and a lot of the money has not yet been spent.  The reason?  States are planning and proceeding carefully, trying to get the best value for the money they receive. 

On Labor Day 2010, the president proposed allocating $50 billion to repair 150,000 miles of roads, 4,000 miles of rail lines, and 150 miles of airport runways.  These are expected to create jobs immediately as well as invest in easier transportation of goods and people for the future.  Congressional approval is needed.

The president also intends to urge Congress to permanently extend a research and development tax credit that expired in 2009, and allow companies to write off all of their investments in plants and equipment through the end of 2011. 

Other investments already in the stimulus bill are $40 billion for upgrading the nation’s energy grid.  That should come in handy as solar activity peaks in the next five years and can potentially burn out electrical grids and satellites.  This program will provide many jobs but is still in the early planning stages. 

Another investment drive is green technology, meant to minimize our dependence on foreign oil and minimize potential threats from the Middle East.  The problem is that green technology is still in its infancy; it will provide jobs, but maybe for our children.  It is an investment, not a stimulus. 

With the midterm elections coming up on November 2, and historical evidence that impatient voters will try something new and vote out the “ins”, the president and his council are scrambling for something that will get the notice of American voters.  It is not enough that this president has passed massive reform legislation that will alter the future of this country and its citizens for the better.  When American voters get in that booth, they ask, “What have you done for me lately?”  If nothing comes to mind, they’ll vote for promises. 

The $850 billion will do a lot of good rebuilding America’s future, but the voters need jobs today, and jobs in sufficient quantities are not in view.  The problem is that many stimulus benefits are far into the future. 

Dinner for the family is needed tonight. 

Employer tax breaks follow the “trickle-down” economic theory that says tax breaks given to employers will allow them to save enough money to hire more people who in turn will spend their income on retail goods that will improve the economy and lead to more jobs.  It does not work in a wealth-driven society like ours, but instead causes an ever-larger wealth gap between the “haves” and the “have-n0ts”.  

Tax breaks fall on deaf ears, when an employer is worried whether his goods will sell today and provide a tomorrow for his company and his family.  He will conserve his cash and restrict production in case of a downturn, and therefore unintentionally causing a downturn.  The cash stays with the employer and improves his profit.

The opposite of trickle-down economics is the “trickle-up effect.”  This approach give the tax breaks to the people.  They have more money left over from supplying their basic needs and with their disposable income they stimulate retail trade by buying goods that will improve the economy and lead to more jobs.  

The key to recovery is stimulating retail.  The only way to do it is to put more cash in the wallets of consumers.  An economy runs on cash circulation; as with people, stop the circulation and the patient dies.  

The modification of the Bush tax breaks proposed by the president is a step in the right direction.  By continuing the tax breaks for those earning less than $250,000, it will not cut off their disposable income. 

What the country also needs is an employment incentive; the opportunity for the unemployed to perform work and feel accomplished. 

There is still a lot of money to be spent and a lot of people unemployed.

What if unemployed workers were offered the education they needed to work at a trade, or get their high school diploma?  It is a fact that unemployment is twice as high for those without a high school education.  It is a fact that graduates in fast growing fields like health care and technology are hired much faster than those unskilled. 

What if unemployed workers were encouraged to volunteer as part of their workweek?  People generally don’t like to be charity recipients.  We live in a fair trade society – when we receive something, we have been taught to feel we should give something in return. 

What if?

President Franklin Roosevelt in 1935 had the right idea, employing thousands in public service under the Public Works of Art Project (PWAP), Federal One and others. 

Writers, artists, musicians and other unemployed workers wrote, painted and performed for the depressed public and were paid.  They brought the country’s records up to date by recording and cataloging historical information; they worked on building projects; they repaired bridges and roads; they painted murals in public buildings.  If they had a skill, they used it and taught it to others; if they had no skill, they used their muscles.   The PWAP program failed because of mandated “guidance” from Washington D.C. and the unemployment problem was solved with the outbreak of WWII, but the idea is still compelling. 

There are many opportunities to volunteer in our own backyards.  Every town has Habitat for humanity, food pantries, libraries and other organizations always looking for help.  The requirements are generally simple; just show up and work “friendly.”  It also looks good on a resume. 

What if we suggest a scenario and make an assumption that many business owners need the help, but don’t have the money to hire new employees.  What if they put out a call to the local unemployment office describing their needs? 

What if the issue of salary and benefits never came up – they would be provided by the state unemployment agency.  Perhaps during their “unemployment” employment, the worker would learn a new skill, something of value to put on their resume.  Perhaps their “unemployment” employer would see the value of hiring that person, or provide a glowing reference to their next interview. 

What if?