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August 20, 2014

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POLITICS:

Unspent federal stimulus cash gets political

Sun Coverage

A popular proposal among Republicans in Nevada and nationwide is to take unspent money from the $787 billion economic recovery act — the stimulus bill — and return it to Washington, where it can be used for tax cuts or to pay down the national debt.

The idea has been popular on the campaign trail, where the leading Republican candidates in the U.S. Senate race in Nevada, Sue Lowden and Danny Tarkanian, both want unallocated stimulus money returned.

Were that to happen, Dennis Freimann has perhaps the best vantage point on the potential effect. The No. 2 in charge at Nevada’s Recovery Act office, Freimann said if leftovers from the state’s $2.1 billion share of the money were returned, “Then we’re talking about a lot of people losing their jobs.”

Nevada is receiving stimulus money for transportation projects, teacher salaries, energy efficiency and more. Halting that would eliminate jobs in a state with a steady 13 percent unemployment rate. Nevada lost 81,000 jobs in 2009 alone.

“You can look at it from just a logical aspect,” said Freimann, a former county auditor who does not follow politics closely. “If they are providing $1 million to put people to work, and they take that $1 million away, are those people still going to have their jobs?”

The anniversary last month of the American Reinvestment and Recovery Act renewed the debate over the program.

Republicans who voted en masse against the bill used the anniversary to mostly deride it as excessive and wasteful government spending that is adding to the nation’s debt. Democrats defended it as a necessary intervention to soften the effect of the Great Recession.

The Recovery Act is bringing $2.1 billion to Nevada — $1.2 billion in direct aid to residents, including unemployment benefits, a $250 one-time check to seniors, income tax cuts, COBRA health insurance subsidies and an expansion of Medicaid health insurance for the unemployed.

Another $924 million went to Nevada agencies to pay for teachers’ salaries, highway repairs, housing rehabilitation, forestry improvements and other programs.

The nation’s leading economists have largely agreed that the stimulus has saved or created 2 million jobs, protecting the country from a deeper recession. But it is also true that the White House was unable to halt the jobless rate at 8.5 percent, as promised last year. The national unemployment rate is 9.7 percent.

Yet, economists mostly agree the stimulus is on track to reach its goal of saving or creating 3.5 million to 4 million jobs by the time the money is spent.

“Almost 2 million Americans who would otherwise be (unemployed) are working right now,” President Barack Obama said in Las Vegas last month.

The Nevada Recovery Act office tallies 2,500 jobs saved or directly created by the $924 million sent to state agencies.

But economists put the actual number at 20,000 by factoring in the $1.2 billion in direct aid programs and the multiplier effect: If folks keep their jobs and have money to shop, store clerks keep their jobs, too.

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Shelley Berkley

“The idea that we’d be returning money we desperately need is ridiculous,” said Democratic Rep. Shelley Berkley, who voted for the bill.

“We’re going to keep every penny that Nevada gets,” Berkley said. “Every senior in Nevada got a $250 check. Every disabled vet — I have 18,000 of them — got a $250 check. We also received a good amount of money for transportation and infrastructure. That’s creating jobs. We are spending that. There are good, important programs being paid for by the stimulus.”

Sen. John Ensign was an early proponent of returning unspent stimulus funds to the U.S. Treasury, offering an amendment in July, as the recovery programs were getting under way. His proposal was to send the money back to Washington to pay down the debt of the federal unemployment trust fund, which is being drained as states seek loans to pay their share of jobless benefits.

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John Ensign

Ensign argued it was more important to stop the rising debt than to fund the jobs the stimulus was producing. He thinks jobs can be better created through tax cuts.

“Let’s show some fiscal responsibility,” Ensign argued. “The reason I voted against the stimulus bill is because I thought a lot of the money was irresponsibly spent and it was going to run up the deficit.

“My dad used to tell me all the time when I was growing up: ‘You have to watch the small amounts of money.’ He used to say: ‘If you watch the $20 bills, the large amounts of money will take care of themselves.’ ”

Yet even as Ensign was voting to return the stimulus money, he sought the Obama administration’s help in securing transportation dollars from the stimulus for two Nevada projects. On Sept. 9 and Sept. 10, Ensign wrote letters to Transportation Secretary Ray LaHood, asking him to consider Nevada projects for Transportation Investment Generating Economic Recovery (TIGER) grants.

The first letter sought consideration for a rapid transit line in Southern Nevada. The other sought financial support for the V&T Railway reconstruction project in Northern Nevada.

“It is vital that our state seeks out projects and initiatives that will create jobs and provide long-term sustainability for some of our most economically distressed areas,” Ensign wrote of the railway work. “That is why this project is ideal for TIGER funding.”

Ensign was not alone in seeking federal stimulus funds for state projects — many fellow Republican opponents of the Recovery Act, including Sen. John McCain of Arizona, did as well.

Democrats have been compiling a “hypocrisy hall of fame” of lawmakers who opposed the stimulus, then asked for some of the money.

Ensign’s office declined to discuss his letters to LaHood.

On the campaign trail, Lowden and Tarkanian have taken a similar approach to the stimulus.

“Enough is enough!” Tarkanian wrote on his Web site. “We should use the leftover stimulus funds to pay for much-needed tax cuts, giving the money back to the taxpayer.”

Lowden thinks “the federal government should not be giving any more jobs to anybody,” her spokesman said.

“The jobs should come from private money, private investment,” Lowden spokesman Robert Uithoven said. “You should not be spending on these projects, kicking the can down the road and saddling future generation with debt.”

That anti-big government rhetoric might rev up voters. But it could be a tougher sell for the 100 construction workers who are being hired for a $26 million highway-ramp project funded by the stimulus on Interstate 580 in Reno.

That highway project is among dozens in the state getting under way, with private contractors bidding on jobs that will unfold this spring and summer. Nevada Transportation Department spokesman Scott Magruder said the bulk of the stimulus spending will be out the door this year. “This is going to be the good summer, no doubt,” he said.

But Lowden thinks if the Reno interchange and other transportation projects are worthwhile, then budgets should be cut elsewhere to pay for them.

So do Republicans in Washington. Just last week, Ensign voted again to return stimulus funds when a fellow Republican, Sen. John Thune of South Dakota, proposed returning $160 billion in unallocated stimulus funds nationwide to provide tax cuts for small businesses.

Ensign said in a brief interview that he would not be taking money from the highway projects unfolding this summer in Nevada — he only wanted to return funds that have not been allocated.

But Freimann said it would be difficult to parcel out the unspent dollars because most of Nevada’s money is spoken for. Of the more than $500 million the state has yet to receive, most is assigned to education, housing, energy and other projects.

If anything, he said, the state could use more funding from the federal government.

Every week his office gets calls and e-mails from businesses and organizations asking if they qualify for stimulus money — a solar project here, a youth program there.

“One of my biggest desires,” he said, “is how can we find some additional funds.”

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