Thune slams stimulus bill as ineffective

Sen. John Thune acknowledged that the $800 billion federal stimulus package has done some good but said Wednesday that he believes the bill has by and large been wasteful and ineffective.

"The stimulus bill is not delivering the benefits promised — including keeping people from losing their jobs. Since the stimulus bill was signed into law there have been 5,800 South Dakotans who have lost their jobs," Thune told reporters. "It's a far cry from the 10,000 jobs that were promised would be created in South Dakota.

"The president and the Democrats in Congress argued that the fast infusion of billions of dollars into the economy would create an economic turnaround. The whole argument was that it would be temporary, targeted and timely. Instead we've seen stimulus funds that have been doled out slowly and inefficiently."

Compounding the issue for Thune is the fact that the stimulus funds were borrowed, adding to the debt.

"It's all borrowed money," Thune said. "Borrowing a trillion dollars from our children and grandchildren for no discernable impact on job creation was not a good thing to do."

Some parts of the stimulus bill have been effective, Thune said — including aid to state governments and other projects. But he said some of those projects will lose their funding when the stimulus is gone and said the bill should have been more effective.

"I’d be the first one to say that when you spend a trillion dollars there ought to be some positive and some good that comes out of it," Thune said.

Thune said he's not opposed in principle to the economic concept of counter-cyclical spending — that in a recession government should infuse borrowed money into the economy to stimulate spending. Thune said his biggest critcism is the type of spending, which Thune said is inefficient and only grows government.

"If you really want to impact the economy and do some things that need to be done anyway, put more into infrastructure," he said. "And clearly tax relief should have been more of a part of this. ... If you're going to borrow a trillion dollars you ought to darn well spend it on things that get some results."

Thune has valid criticisms about the stimulus bill — its promised benefits have not yet materialized. What's unclear is why. Only about one-quarter to one-third of the stimulus money has been spent so far (and much of that in a payroll tax cut); maybe next year's second wave of funding will have a bigger effect (just in time, many Democratic politicans may note, for the 2010 elections). Maybe the areas where money was dumped in the stimulus bill weren't the most efficient places to put it. Maybe the stimulus WAS effective — but therecession was so bad that even $800 billion couldn't have much effect, or that the bad situation we're in now would have been many times worse without the stimulus. Maybe the programs were good but the government has bungled the administration.

I'm not an economist, and the book is certainly not yet closed on the two-year stimulus bill. It's clear that so far it's been a disappointment. We probably won't know for sure what the final economic verdict is until years into the future.