July 15 (Bloomberg) -- On the campaign trail, Republicans are reviving attacks on the Obama administration’s $830 billion stimulus package. It’s a debate Vice President Joe Biden, who oversaw the program, won’t shy away from.
Republicans say the stimulus failed; the White House says it worked to curb job losses at the height of the recession. A May report by the nonpartisan Congressional Budget Office concluded the stimulus increased the number of people working during the first quarter of this year by between 1.2 and 3.3 million and lowered the unemployment rate by between 0.6 and 1.8 percentage points.
The issue has become such a complicated sale to voters that President Barack Obama doesn’t regularly bring it up. In contrast, Biden routinely highlights the signature assignment that helped transform his image from a gaffe-prone presidential partner to an influential voice inside the administration.
“He deserves a great deal of credit for overseeing a very, very difficult expedited program,” said David Axelrod, Obama’s campaign strategist and former White House aide.
Former House Majority Leader Dick Armey, a Texas Republican who heads the small government activist group FreedomWorks, which helped organize the 2009 summer Tea Party protests, takes a different view.
White House Fantasy
“The only people who can have any fantasy that the stimulus was a good thing that did something for America are the people in the White House and a couple of misguided college professors,” said Armey. “Joe Biden as the sheriff on the stimulus package is a concept without substance.”
A July 8 Labor Department report showing the smallest monthly job growth in more than a year and an increase to 9.2 percent in the unemployment rate prompted a fresh cascade of criticism from Obama’s potential presidential rivals.
Minnesota Representative and Republican presidential candidate Michele Bachmann called the June jobs report “another stark reminder of the failure of President Obama’s economic policies,” in a statement posted on her website. “The president promised if we passed the massive stimulus package that unemployment wouldn’t go above 8 percent. We are now at 9.2 percent,” she added.
As the program winds down, the slow economic recovery and corresponding state government budget shortfalls are exposing the fragile stability the program provided for some.
In one local Florida school system, 375 jobs were sustained with approximately $54 million in stimulus money over the past two years. This fall, 60 of those positions will be cut because of lack of funds, said Deputy Superintendent Diana Greene.
“The stimulus is a band-aid that’s being ripped off,” said Noelle Ellerson, an American Association of School Administrators analyst.
Biden’s Expanding Role
Teachers, firefighters and police officers were backdrops for Biden as he made 45 trips outside Washington promoting the program.
While he was still managing the stimulus, Obama asked the 68-year-old vice president to help push an overhaul of the health-care system through the Senate. Biden also attends foreign policy discussions, including Oval Office debates over the Afghanistan war in which Biden pressed unsuccessfully against the 2009 troop surge. Since then, Obama has moved closer to Biden’s position, said Steve Clemons, an analyst at the New America Foundation, a policy research organization, who has counseled the White House on policy issues.
This spring, the president asked Biden to lead bipartisan talks aimed at brokering a deficit-reduction package that will clear the way for lifting the $14.3 trillion debt ceiling. The so-called “Biden talks” could now provide a framework for a final deal.
“People take him seriously and it’s not an easy thing to be taken seriously as a vice president,” said H.W. Brands, a presidential scholar at the University of Texas at Austin.
When Obama announced on June 13 Biden’s leadership of the Government Accountability and Transparency Board, which aims to eliminate waste and abuse, the vice president said implementation of the American Recovery and Reinvestment Act -- the stimulus’s formal name -- would be his model.
“The first major test of our commitment to change the way government does business was the recovery act,” he said, and it will be the “standard by which we would judge all future programs.” Biden wasn’t available for an interview for this article.
Biden was involved in the stimulus program from the outset. He used relationships built during 36 years in the U.S. Senate to help pass it in February 2009. Former Pennsylvania Senator Arlen Specter said the vice president called him 14 times in two days to win his vote. Specter was one of three Senate Republicans to back the legislation. Biden later helped persuade Specter to switch parties.
Each Thursday, Biden received an update on the distribution of stimulus money before it was posted publicly. He held round-table discussions with department administrators to stay on top of the implementation, and imposed a 24-hour response time on any questions or concerns raised by state and local officials.
He also brought governors and local officials to the White House and lectured them about the importance of avoiding scandal. Former Tennessee Governor Phil Bredesen, a Democrat, and former Georgia Governor Sonny Perdue, a Republican, said Biden called them monthly to check on progress.
The vice president handed oversight of the stimulus in February 2011 to Office of Management and Budget Director Jacob Lew.
Jobs in Jeopardy
Today, many jobs the White House takes credit for saving or creating are in jeopardy because of state budget cuts and the expiration of the stimulus program. Economic forecasters are warning that a retraction of public sector jobs could slow the recovery even further and extend the high unemployment rate.
A primary reason the unemployment rate ticked up in June, the labor report showed, was that 39,000 lost jobs from the federal, state and local governments undercut the 57,000 jobs gained in the private sector.
In addition to teachers, law enforcement is a stimulus beneficiary now contracting. The Recovery Act helped 1,297 police officers keep their jobs and funded 3,389 new police officer positions, according to Department of Justice spokeswoman Jessica Smith. Now “tens of thousands” of police officers are likely to be laid off, said Jim Pasco, a Fraternal Order of Police spokesman.
Two years ago, the police department in Trenton, New Jersey hired 16 new officers using $2.96 million stimulus dollars, according to Detective Alexis Durlacher, the department’s grant manager. In September, those 16 officers -- plus 95 of their colleagues -- will lose their jobs.
State Budget Shortfalls
Perdue, the former Georgia governor, sees wider erosion. About $9.51 billion in stimulus funds were distributed to the state, private businesses and other entities including universities and contractors, according to the Recovery Board.
Now, new Republican Governor Nathan Deal, who opposed the stimulus while serving in the House in 2009, faces a projected $823 million budget deficit in 2011 and a $1.94 billion deficit in 2012, according to the nonpartisan Georgia Budget and Policy Institute.
“I was concerned from the very beginning that the stimulus was like a flash flood on a dry creek bed,” Perdue said. “That while we would get some needed rain, it would come so hard and so fast that most of it would run off and really not soak in.”
At a Feb. 17 event turning oversight of the stimulus over to Lew, Biden said there were limits of the program and he nodded to the messaging challenge going into the campaign.
“We lost several trillion dollars in the economy, real loss,” he said. “The idea that we can spend $800 billion, no matter how well we spent it, to fill in that deep hole we had been thrust into -- we never advertised that.”
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