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StumbleThe economy:
Not a cure-all, but stimulus money helped Nevada
Wednesday, Dec. 23, 2009 | 2 a.m.
Sun Archives
- Stimulus job-count guidelines frustrate (11-13-2009)
- Stimulus credited with 5,600-plus jobs in Nevada (10-30-2009)
- Gaming execs credit stimulus with saving Nevada jobs (10-22-2009)
- Stimulus is paying, not that you’d know it here (10-16-2009)
- Wynn: Stimulus plan won’t solve city’s woes (4-10-2009)
- Lawmakers debate wage floor for stimulus jobs (3-5-2009)
Sun Coverage
The federal stimulus may not have created many jobs in Nevada, but it did keep tens of thousands of people from sliding into poverty, according to a new study.
The left-leaning Center on Budget and Policy Priorities estimates that provisions in the American Recovery and Reinvestment Act, including tax credits and extended unemployment benefits, kept 58,000 Nevadans from falling below the poverty line this year.
The Washington think tank said the stimulus softened the economic blow for 6 million people nationwide.
Center analysts labeled the estimates conservative because the report examines seven provisions that cover just one-fourth of the bill’s $787 billion.
Nevada economists said the study provides a clarifying moment in the economic debate as both political parties gear up for next year’s midterm elections.
Republicans have billed the federal stimulus package as a boondoggle, attacking Democrats for failing to create jobs in the face of continued unemployment.
Democrats and their allies, including the Progressive Leadership Alliance of Nevada, herald the legislation as crucial in a state with a strained social safety net.
(According to the state, Nevada has received more than $2.1 billion in federal money and created or preserved nearly 4,500 jobs.)
Experts say Democrats and the Obama administration oversold the jobs component of the stimulus but maintain the legislation provided crucial assistance to lower-income families. Moreover, states relied on federal stimulus dollars to cope with falling revenue and mounting deficits, which otherwise could have led to cuts in social services or government-employee layoffs.
“The whole thing that was called stimulus really wasn’t stimulus,” said Bill Robinson, a UNLV economist. “That said, (the package) is incredibly important, maybe more important here. We got hit harder than just about anywhere else. All those things that help people keep their houses and keep their kids fed are important. As bad as things are, you’d hate to think where we’d be if we didn’t receive this money.”
The center’s report focused on seven stimulus provisions:
• Extended unemployment benefits
• Expanded food stamp benefits
• A new “Making Work Pay” tax credit of up to $400 for workers ($800 for couples) earning up to $95,000 ($190,000 for couples)
• Expanded Child Tax Credit for lower-income families
• Expanded the Earned Income Tax Credit
• An additional $25 per week for unemployed workers to supplement unemployment benefits
• A $250 one-time payment to the elderly and disabled who receive Social Security or veterans’ benefits
UNR economist Elliot Parker said the package appropriately targeted those on the lower end of the economic scale because “they are more likely to lose their jobs, more likely to have lost their house, and least likely to have enough savings to tide them over.”
The center notes a stimulus effect, saying lower-income people are more likely to spend money quickly, thus pumping money back into the economy.
Chris Edwards, director of tax and budget policy at the right-leaning Cato Institute, criticized the claimed stimulus benefits.
“Of course, the beneficiaries of any government subsidy are better off because of the subsidy,” he said. “But the government ultimately has to get that money from somewhere else, and those people are taxpayers now or taxpayers in the future. It’s a zero-sum game.”
Edwards, an economist, said certain measures, such as extending unemployment assistance, have negative effects on the economy because the unemployed “become less willing to go out and find a job.”
Jobs, however, are hard to come by. According to the Bureau of Labor Statistics, roughly six people are competing for every job opening.
States — and Nevada in particular — would have faced much tougher budget decisions without the infusion of federal dollars, Parker said.
“It’s as if the states kept on digging a hole while the feds were trying to put the dirt back in,” he said.
During this year’s legislative session, state lawmakers leaned heavily on the stimulus, along with budget cuts and tax increases, to balance its budget. The state budget office projects Nevada will get $1.1 billion more in federal funding for the current budget than it did in the previous budget cycle — money that is being used to help pay Medicaid benefits, education funding and general government.
This month, a joint report from the National Association of State Budget Officers and the National Governors Association said states have cut $55.6 billion from budgets in the current fiscal year — but still face deficits totaling $14.8 billion.
Overall, general-fund spending is expected to decline 5.4 percent, the sharpest drop since the groups began collecting data in 1979. At the same time, states have enacted tax and fee increases expected to raise $23.9 billion, the largest recorded hike.
Nationally, states filled between 30 percent and 40 percent of their budget gaps with federal stimulus money.
In Nevada, the federal money that was included in the stimulus also increases the size of the projected deficit in 2011, when the Legislature next meets. Without the federal money and with tax increases passed last session set to expire, the state is facing a hole projected at $2.5 billion. Gov. Jim Gibbons has called on state agencies to prepare for as much as 10 percent in additional cuts.
“This is a Great Depression in Nevada. There is no other way to put it,” Robinson said. “We started gaming as a way to cushion the last Great Depression. There is nothing to put in now. We live with what we’ve got.”
Sun reporter David McGrath Schwartz contributed to this story.
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"The federal stimulus may not have created many jobs in Nevada, but it did keep tens of thousands of people from sliding into poverty."
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I agree the pay raises and increased benefits for Union State, County, and City worker kept them out of poverty.
They always make it sound like it was free money or it was the governments money. They "loaned" us OUR own money and it has to be paid back. Whether it's you or your children.... it will be paid back. Never sniff a government gift fish.
The entire country is sliding into poverty.
Yeah the entire country is sliding into poverty, so while we are at it why do we allow Osama Obama to send thirty thousand more troops to Afghanistan at a price tag initially of 30 billion dollars? Are we insane? WAKE UP AMERICA WHILE THERE IS STILL A PLACE CALLED AMERICA!!!!!!
wow! things that bad in vegas? maybe you guys should consider moving.
Grandma,
I'm not an expert on how the funds were distributed, but there are two things: first, Nevada is far from the most populous state. Second, Nevada turned down other stimulus dollars (for good and bad reasons). That would certainly impact the proportion of funding returned to the state. Besides, as silly as it sounds... that money had to be processed and people must be paid to process that money.
Regardless, some people may call this article spin... but I like the information and I think that the stimulus (for lack of a better term) is beneficial for most.
How many more people would have risen out of poverty had the government left the money in the marketplace. Every time the government helps us they put the economy deeper in the hole. We need less government at every level. We need more freedom at every level. We need to dump harry Reid.
Dingo: why don't you like caucasians?
Wasn't the stimulous package supposed to be about creating jobs?
You know, that whole "Teach a man to fish...." thing. How is increasing handouts a long term sustainable solution?
All these elite politicians who just want power need to be sent home during the next election.
Don't you all now that entitlement programs help improve the country for all!!! (Extreme Sarcasm)
This money is a trap for the state. The state could not afford these programs when they were less and know the fed gov raised them. What happens when the fed doesn't send another infusion of money? The moochers will be mad at the state and will praise the fed.
So many continue to forget the price tag every gov dollar has. Someone has to pay for it. If you squash the wage earners, the moochers and the government will have nothing left to take.
The country is divided into states for a reason. The founders knew there was a huge potential for problems if the fed gov had too much power. In the beginning, states had the power and fed was quite limited. It sure was changed.
rejco100: What? Put down the crack pipe.
"Stimulus" funding helped America stay afloat in the 30s until the war took us out of the depression. At that time, people were grateful for work and jobs. But this century, everyone is full of cynicism and pessimism. The only thing it seems that the vocal minority hope for is this city's/country's failure. What do you hope for then? To stand atop a pile of rubble only to proclaim, YUP! I was RIGHT!?
No plan is without flaws, but I'm constantly impressed by how negative people posting on this website can be.
Peegee, the country was pushed into a greater depression because of the out of control spending. The economy was lucky a war came that hid the mistakes of gross government spending.
The vocal minority you refer to is actually the majority. Just because Obama got himself into office doesn't mean that you are in the majority. Many have voters remorse sinse the pres sold himself as a fiscally responsible centrist and that certainly was not the case.
Jr99,
And a vast majority of the country's infrastructure was established at that time. And it accomplished the at least one thing it was originally purposed to do: give people hope. It accomplished more, too. Like tremendous reform that helped create the situation in the first place.
All I've maintained is that not all program is bad. In the case of this article, it seems that this Stimulus package has done some evident good.
There's plenty to complain about, but if all you do is complain... you end up like rejco, making uninformed generalizations that only offer insight into his psyche and educational background.
Does anyone else think his last post was a bit bigoted?
Peegee,
Government should maintain infrastructure but it is using infrastructure to hide billions in earmarks and waste spending.
The article states that it the stim package has helped but it doesn't mean the article is right. The bill will need to be paid and we don't know what that will do.
Disagreement should not be confused with complaining or inactivity. I work, I have a family, I pay taxes, I vote, I have ideas that I send to my representatives. Please don't take the route of the current administration and assume that those that do not agree with them are fear mongers, haters, racists, mean, and so on.
I do agree that rejco comments are not warranted but he has a point. The Obama admin is a believer in heavy welfare(trickle up economy). The funny thing is that there is no such thing as a trickle up economy. Welfare money is money taken from someone else and given to another person. I do believe that assistance should be given but I'm not sure if it is governments role and there should be a time limit. Welfare does not stimulate the economy nor will it ever.
More government take over: This makes me angry!!! More Spending!! Breaking news from the Washington Post 12/30/09:
The federal government said Wednesday it will take a majority ownership stake in the troubled auto lender GMAC, providing another $3.8 billion in aid to the company, which has been unable to raise from private investors the money it needs to staunch its losses. GMAC, which already has taken $12.5 billion in direct federal aid along with other forms of government support, is the largest lender to General Motors and Chrysler dealerships and to their auto-buying customers. The Treasury Department said it will increase its stake in GMAC to 56 percent from 35 percent. Obama now owns 6 companys, financiers Fannie Mae and Freddie Mac, automakers General Motors and Chrysler, and the insurance company American International Group. The government also owns a large stake in Citigroup.