Posted: February 18, 2009
Economists, business owners react to stimulus bill
Feelings are mixed about spending billBy Dan Ray
President Barack Obama stepped off of Air Force One Tuesday morning and was sped via motorcade to the Denver Museum of Nature and Science. His purpose: to sign into law one of the most historic, expensive and controversial economic packages the U.S. has ever seen. The choice of Denver, Colo., was no mistake. Not only was Colorado a battleground state during the 2008 election but also, according to some, the state stands to be one of the regions most directly impacted by Obama's stimulus package – particularly when it comes to the renewable energy industry.
The new economic plan, which was signed into law Tuesday afternoon, comes with a $787 billion price tag – approximately two-thirds of which consists of government spending, with the remaining third in the form of tax breaks. The intent is to revitalize the dying economy, create jobs and build infrastructure.
But will it succeed?
"We're not going to wake up tomorrow and suddenly see five million jobs in the want-ads," said Tucker Hart Adams, economist and president of the Adams Group Inc., a regional consulting firm based in Colorado Springs. "It will create some jobs, but we'll never really know how many. But it's going to be a long and slow slog."
Others question whether the spending will simply create more problems:
"We really would have like to see some immediate tax relief," said Bill Rys, tax counsel for the National Federation of Independent Business. "But the question is with so much spending is, 'Does it create other long term issues?' So the federal deficit is a major concern."
"We're not going to see much in the short term," Adams said. "Probably the most positive impact will be in general sentiment." The only significant short-term gains Americans should expect will likely come as a modest increase in consumer confidence, she said. One of the industries likely to be boosted the most by the focus of the package will be construction, she said. "This is badly needed in this country," Adams said. "It will create jobs for people in those sectors and with those skills, but I don't think anyone laid-off at Citibank will be able to find much work on the roadways."
Colorado may benefit from the stimulus package somewhat more than other states because it's ahead of the curve on green energy. But, overall, the impact on Colorado will be similar to the rest of the nation, Adams said.
John Berger, CEO of Standard Renewable Energy is more enthusiastic about the impact Obama's plan will have on Colorado. "We're going to do more than our fare share," Berger said. "I think it is a big positive for Colorado." Standard Renewable Energy currently employs 200 people, Berger said. By the end of 2009 Berger expects this number to more than double to 450 employees. "We're going to hire more people because of this bill," he said. "In Colorado we've been a leader as a state, and I think that is witnessed by the fact that the president is signing the bill here."
Still, criticisms of the stimulus bill – now law – have come not only from the other side of the aisle, but also from business owners and organizations from across the nation. "I think all of our members have concerns about the spending and where it might be targeted," the National Federation of Independent Business' Rys said.
There is certainly a lot of value in revamping government investments in infrastructure, Rys said. But other spending efforts may not be as strong. And Rys is far from alone in questioning the high levels of spending in the stimulus package and how that spending will be executed.
"It must be coordinated with some sort of financial bailout plan," said Ufuk Devrim Demirel assistant professor of economics at the University of Colorado-Boulder. According to Demirel, the spending efforts will not be completely effective without a follow-up strategy to last year's record government bailout.
"These two legs of the economic package must be really coordinated, as well have a serious impact to lead to recovery," he said. The ratio of spending to tax breaks also reflects a political compromise, rather than a systematic strategy, Demirel said. "It would be a much better stimulus package if we saw even more spending," he said. "If we just let the economy go, you're going to have to wait a lot longer to see benefits."
But, Demirel said, "It's definitely a step in the right direction."
Dan Ray is a graduate student at the University of Colorado School of Journalism and Mass Communication.