President Obama wants Congress to spend more money to help states and localities struggling with huge deficits. But he does not want to call it a stimulus package, apparently.
Mr. Obama has intimated in the past that the federal government’s job of propping up the economy was not yet done. Last week, he sent a letter to Congress supporting efforts to pass two separate measures totaling as much as $50 billion in aid for states and cities.
With states still facing large budget shortfalls, Obama wants to minimize the potential loss of teachers, law enforcement officers, and firefighters. He estimates that as many as 300,000 teachers could be laid off. In this way, the money would largely pick up where the $787 billion federal stimulus bill left off.
In the end, he conceded: “We should not be too careless about pulling out of our stimulative efforts too quickly.”
Mr. Axelrod’s discomfort is an acknowledgment that the American Recovery and Reinvestment Act did not deliver in precisely the way it was promised. Touted as the only way of keeping unemployment below 10 percent, the unemployment rate tipped 10 percent anyway.
Obama’s push for more stimulus, however, suggests that the administration believes that the stimulus package blunted the worst of the recession – as the White House has repeatedly argued. The state and city stimulus is a bid to repeat the process this year for states and localities that cannot run deficits by law.
Critics argue that this tactic has created only the veneer of a recovery. Jobs numbers released June 4 showed that the vast majority of new jobs were census jobs paid for by the government. The private sector created only 41,000 jobs – its worst performance since January.
The Obama administration counters that it is better and more economical to keep teachers and police officers in their jobs until the recovery takes hold. Otherwise, if laid off, they would be a drag on a still-fragile economy.