Obama's 'don't call it a stimulus' economic development plan

The first part of an economic development program announced Monday by President Obama would bring $50 billion in infrastructure upgrades, but the term 'stimulus' has become associated with big government spending.

By , Staff writer

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    President Obama attends a Milwaukee Laborfest event Monday to celebrate Labor Day.
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When is a stimulus plan not a stimulus plan?

When there’s a midterm election coming up and you’re getting hit hard about big government spending, that’s when.

The Obama administration this week is rolling out a multipart economic, um, development program intended to help fight persistently high unemployment. President Obama talked about one part of this program, a proposed $50 billion investment in upgrades for US roads, rail lines, and runways, on Labor Day in Milwaukee.

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Mr. Obama’s new plan will also include a proposal to allow businesses to fully write off capital investments through 2011, and a permanent extension of R&D tax credits, according to administration officials. The president will outline the whole thing in a speech on the economy scheduled for Wednesday in Cleveland.

"This is a plan that will be fully paid for and will not add to the deficit over time – we’re going to work with Congress to see to that,” said Obama Monday.

In political terms, the proposal is supposed to show that the White House is focused on voters’ biggest concern: the dismal economy. Unemployment has ticked upwards to 9.6 percent, growth is sluggish at best, and things are unlikely to get much better in the two months between now and the election.

But please don’t call the proposal a “stimulus.” That’s the tag that got slapped on the American Recovery and Reinvestment Act of 2009, and the administration does not want the new plan associated with the old one in terms of cost and scale. Throwing money at a staggering economy is out; targeted investment to help the recovery accelerate is in.

“The car ... is finally moving in the right direction, but it needs to go a lot faster,” wrote Jared Bernstein, chief economic adviser to Vice President Joe Biden, on Monday in a White House blog post defending administration efforts.

But Republicans say Obama’s plan is a stimulus, and they say the heck with it. They’re already doing all they can to hang that one word on the new infrastructure/tax break effort.

“President Obama’s proposal of another $50 billion in economic ‘stimulus’ proves that Washington Democrats have run out of ideas to jumpstart our economy,” said Republican National Committee Chairman Michael Steele in a Monday statement.

Republican leaders are also already trying to associate the administration’s new proposals with the Democratic Party as a whole.

“Washington Democrats are ready to put Americans on the hook once again for wasteful spending with another desperate political ploy,” said the National Republican Congressional Committee in a statement Tuesday.

However, given a tight work schedule, plus Capitol Hill’s bitter partisan atmosphere, it’s unlikely that Congress will pass Obama’s new plan prior to the November elections. Following that, expected GOP gains would make passage of such new efforts much more difficult.

In general, the GOP says the 2009 stimulus was a flop because it failed to generate sustainable job growth and led to record deficits. Democrats reply that unemployment would be much worse absent that effort, and that the investment was needed to keep the economy from exploding.

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