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March 09, 2009

Was the Economic Stimulus Bill a Good Idea?

Last Friday Governor Jim Douglas (R-VT) and Senator Pat Leahy (D-VT) cosponsored and appeared at a workshop for Vermonters on the American Recovery and Reinvestment Act (aka ARRA aka "the stimulus bill"); 700 people came and more would have if there had been more room available at Champlain College. There were lots of questions, of course; some of which there were answers for and others which'll have to wait for answers.

The question which sticks in my mind is one a woman asked me in the hall: "was the economic stimulus bill a good idea?"

The answer is that it's up to us to make it a good idea so we really don't know yet. Spending this much money this quickly is an opportunity. If we do a good job with most of it, the bill will have been a good idea. If the money is spent unwisely or ineffectually, it will have been a very bad idea. This is money that is adding to the national debt. Debt's OK if you use it to build assets; debt's not OK as a regular way to pay current expenses (that's why states like Vermont have to balance their budgets every year but can borrow for capital items). The misuse of debt clearly helped get the world economy where it is today. So it's crucial that we use this money borrowed from future taxpayers well.

Back in the Great Depression there was a very serious suggestion that Vermont apply for federal money to build the Green Mountain Parkway. This scenic skyway would link the mountain PEAKS of Vermont including Killington, Camel's Hump, and Mt. Mansfield. Obviously lots of jobs would be created as this road was built. Tourists would flock to Vermont so that they could drive skyway as they do the Blue Ridge Parkway in North Carolina. One of the two main proponents of the parkway was James Paddock Taylor, who was not only head of the Vermont Chamber of Commerce but also the man who had the idea for the Long Trail which had already been built but wasn't a big money maker. The Burlington Free Press was for the parkway; the Rutland Herald was against it. In the end, the parkway was defeated fairly narrowly in the legislature. Good thing even though it would have created lots of jobs.

On the other hand many of the fine trails visitors and Vermonters hike on today were built by The Civilian Conservation Corp (CCC) during the depression. This is infrastructure which has lasted and still serves us well. There are many other projects from the depression era Works Progress Administration (WPA) which served well for many years, some of which are still around. And there was lots of money that was wasted.

The great economist John Maynard Keynes said that government could help cope with depressions by hiring people to dig holes and hiring other people to fill them up again. Doesn't really seem like a good idea, though. Once the money runs out all you have is debt and some recently disturbed dirt.

We do want to put people back to work; but we can do better than Keynes suggested. We have to hire people to build infrastructure that'll be a long term benefit and the basis for permanent jobs. We not only have to reduce the backlog of deferred maintenance on our existing systems at a time when workers and equipment are available and asphalt and steel are cheap; we also have to build the communication and smart energy infrastructure of the future. We need to do these things for economic, environmental, and strategic reasons. The stimulus money CAN be used to get us where we want to go. It can also be squandered.

The choice is ours. Was the stimulus bill a good idea? We'll see. The results depend on all of us.

Tom Evslin

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