The CBO Report

Ken AshfordEconomy & Jobs & DeficitLeave a Comment

So the Republicans went out in front of the cameras yesterday to let the world know something.  According to a non-partisan study by the Congressional Budget Office, the money from Obama's stimulus plan won't be spent until quite some time.

The media picked this up and reported it as fact.  The Washington Post, for example:

Stimulus Projects May Be Slow, CBO Says

A report by the Congressional Budget Office found that only about $136 billion of the $355 billion that House leaders want to allocate to infrastructure and other so-called discretionary programs would be spent by Oct. 1, 2010. The rest would come in future years, long after the CBO and other economists predict the recession will have ended.


But the CBO analysis appears to confirm the complaints of many Republicans and other critics, who have long argued that spending money on highway construction and other infrastructure projects is ineffective at quickly jolting a sluggish economy. The report was distributed to reporters yesterday by aides to Senate Minority Leader Mitch McConnell (R-Ky.)

The report also suggests that the House measure would violate Obama's rules for the stimulus package; Obama aides have said they want the bulk of the spending to occur before 2011. Obama has pledged that the measure would save or create at least 3 million jobs over the next two years.

The networks ran with it as well, reporting it at least 81 times:

– “There’s a Congressional Budget Office report out today that suggests that the $825 billion stimulus proposal from Democrats, which is supposed to be timely and temporary, actually offers most of its spending a couple years from now,” — Carl Cameron [Fox News, 1/20/09]

– “Even the Congressional Budget Office is very skeptical about the rapidity with which that stimulus, this set of proposals, can move through, and that it could be four years before we see the results,” — Andrea Mitchell [MSNBC, 1/21/09]

– “Well that was another question raised in this Congressional Budget Office study. It was suggesting that a lot of the spending proposals in the original plan would not really take effect for a couple of years, so it wouldn’t clearly help create jobs in the first two years of the president’s administration,” — Ed Henry [CNN, 1/23/09]

– “There was a report out earlier this week from [the] Congressional Budget Office pointing out that the appropriated funds, that portion of the stimulus package that, you know, less than half of that was really going to be spent even within the next two years,” — Karen Tumulty [CNN, 1/24/09]

The problem?  No such CBO report exists.

The CBO did do a preliminary analysis on an older version of Obama's stimulus package, not the one being offered now.

But today, we have the actual CBO report on the actual stimulus package.  Let's return to the Washington Post, in today's article (written by the same journalist):

House Plan Offers 'Noticeable Impact'

CBO Sees 65% Spent by End of Fiscal 2010

Approximately two-thirds of the spending and tax cuts contained in an economic stimulus package crafted by House Democrats would flow into the economy by the end of fiscal 2010, producing a "noticeable impact on economic growth and employment," congressional budget analysts said yesterday.

In an eagerly awaited analysis of the stimulus package, which is set for a vote in the House tomorrow, the nonpartisan Congressional Budget Office concluded that the measure would cost the federal government about $816 billion over the next 10 years and that approximately $526 billion, or about 65 percent, would be spent by the end of September 2010

Got that?  The "fake" CBO report said that "about $136 billion… would be spent by Oct. 1, 2010"; the real one, released today, says "approximately $526 billion, or about 65 percent, would be spent by the end of September 2010."

Way to report, media.

Is Obama's stimulus package perfect?  No.  There is some unnecessary spending which probably won't stimulate the economy or provide jobs.  (NOTE: the most controversial spending provision — where money was allocated to medicare for the distribution of contraceptives — was removed this morning).

And there are too many tax cuts which won't help at all.  Bob Herbert is frustrated:

The truth, of course, is that the country is hemorrhaging jobs and Americans are heading to the poorhouse by the millions. The stock markets and the value of the family home have collapsed, and there is virtual across-the-board agreement that the country is caught up in the worst economic disaster since at least World War II.

The Republican answer to this turmoil?

Tax cuts.

They need to go into rehab.

The question that I would like answered is why anyone listens to this crowd anymore. G.O.P. policies have been an absolute backbreaker for the middle class. (Forget the poor. Nobody talks about them anymore, not even the Democrats.) The G.O.P. has successfully engineered a wholesale redistribution of wealth to those already at the top of the income ladder and then, in a remarkable display of chutzpah, dared anyone to talk about class warfare.

And yes, some of the spending is a little slow.  But Steve Bene reminds us of two points:

As for the "slowest" parts of the package, the CBO analysis notes a variety of factors, including "seasonal" concerns — school renovations are better over the summer, and highway construction in the north over the winter is inherently tricky.

What's more, I'm also reminded of something Paul Krugman noted over the weekend: those portions of the stimulus plan that'll kick in later might help, too, since the economy will need ongoing boosts. "[W]e're looking at a situation where even if some of the projects are continuing to add spending two years out, two-and-a half, even three years out, that's not such a bad thing," Krugman explained.

So, it's not too bad.  The important thing is to get it passed, and passed now.  The House GOP seems unified in voting "no" on the bill.  That's fine, if not entirely predictable.  Maybe we shouldn't try to appease them.  Perhaps the thing to do is to take the bill back and make it better.  After all, the GOP votes aren't needed.  The whole "bipartisan" attempt was nice, even noble, but that requires both parties to play.