After President Obama signed the $787 billion stimulus last week in a spiraling global financial crisis, university economists agreed that the bill is necessary to reverse recession impacts but were unsure how long the economic healing process could take.
Economists from CSU and CU-Boulder echoed one another in the relief they felt after learning the bill passed through Congress. But while they said the stimulus dollars are a first step in providing financial assistance to people left jobless and in debt as a result of the recession, the economic recovery process will not happen overnight.
“I was very relieved. I think that the alternative to the stimulus package is a potential economic collapse,” said Steven Shulman, professor of economics and chair of the Economics Department. “I think it’s an absolute necessity for the government to mitigate that possibility.”
“It’s still quite possible that economic events could spin out of control,” he warned, but said, “doing nothing in the face of this world-wide economic slowdown is just unacceptable.”
Shulman and CSU associate economics professor Elissa Braunstein agreed that economically, the nation is teetering on the edge between collapse and recovery. Neither was sure how much time it will take for the national economic wounds to heal after the stimulus dollars are applied.
“I’m definitely a supporter, a very strong supporter,” Braunstein said. “We’re at sort of a precipice here . of what could potentially be a very long recession and depression.”
“What (the stimulus) is trying to do is to shorten the period (of the recession) and be in a better situation in the next five years.”
Martin Boileau, associate professor of economics at CU-Boulder, said about 80 percent of economists claim support of the bill.
Shulman said people should not assume the stimulus is an overnight cure.
“That’s an unrealistic expectation,” he said. “There’s no guarantee that it will work. It simply lowers the chance that we will fall off the cliff.”
Shulman said the recession followed what he called an economic “perfect storm” where a number of factors converged — beginning with a dive in the housing market, which in turn dragged down the value of financial assets. This caused financial instability and the possibility of a banking collapse, pushing credit to dry up and ultimately making it difficult for the “real” economy to function.
He said economic downturns are often cyclical, meaning “what goes up has to come down” and that the recession is a common occurrence in an economic system.
All said the $787 billion may not be sufficient and more may be necessary down the road.
“Many feel (the stimulus) is on the lower side,” said Deepankar Basu, a CSU associate economics professor, who said he thought in Colorado, the money should be allocated to boost employment, make healthcare more affordable and to fund infrastructure projects and higher education.
According to the breakdown of Colorado’s stimulus money — which totals about $2 billion — more than $930 million is slated to go to education. This money is anticipated to prevent teacher layoffs, provide new higher education tax cuts to about four million students and increase the maximum award level of national Pell Grants, national need-based grants to low-income undergraduates, by $500.
Interim CSU President Tony Frank said the Colorado Commission on Higher Education CEO Council discussed the impact of the stimulus package on higher education Wednesday but that he didn’t know how much money the university can expect.
“It’s really too early to know what the impact will be since the federal Department of Education has yet to issue the rules that will govern/clarify the legislative intent of the education-related portions of the bill,” Frank said in an e-mail. “That said, we’re hopeful these funds will help mitigate FY09 and perhaps FY10 budget reductions.”
Braunstein said that the U.S. is not the only one stuck in the economic rut, and that the global financial crisis, if it has not already, should push other countries to pursue financial bailout.
“All countries should be engaging in this kind of stimulative spending simultaneously,” she said, noting that because of its global financial pull, the U.S. could take other countries down with it.
Assistant News Editor Madeline Novey can be reached at email@example.com.
Breakdown of stimulus bill benefits
– Create or save 3.5 million jobs over the next two years
– Provide nearly 40 percent of the package in direct relief to working and middle class families
– Double renewable energy generating capacity over three years
– Creates a Clean Energy Finance Authority and Renewable Tax Credits that together will leverage an additional $100 billion in private investment in our nation’s infrastructure — the largest investment since the interstate highway system in the 1950s
– Protect health care coverage for millions of Americans during the recession
– Enact the most significant expansion in tax cuts for low and moderate-income households ever
(Information courtesy of http://abclocal.go.com.)
Allocation of Colorado’s $1.97 billion stimulus money
– Up to $400 for workers who make less than about $75,000 per year, or up to $800 for married couples filing jointly who make about $150,000 or less
– $250 to Social Security beneficiaries and disabled veterans
$2,500 to each of 36,000 Colorado families who qualify for the new Americana Opportunity Tax Credit, which seeks to make college more affordable
Monetary breakdown by Colorado sector
$634.5 million for infrastructure and science
– Highway funding
– Mass transit
– Cleand/drinking water infrastructure needs
– Affordable housing/rental assistance for poor families
– Aid public housing agencies/improve energy efficieny
– Homelessness Prevention Fund
$932.8 million for education and training
– Local school district/public college and university modernization
– Special education programs
– Funding for disadvantaged students
– Funding for Department of Labor’s Youth State Grants
– Assistance for the unemployed
– Upgrades to classroom computers/software
– Increase in the number of awarded Pell Grants
$130.2 million for energy
– Funding to the State Energy Program
– Funding to the Weatherization Assistance Program
$226.3 million for protecting the vulnerable
– Funding for Supplemental Nutrition Assistance Program benefits (food stamps)
– Funding for child care and grants to low-income families
*Data does not include money allocations for law enforcement, extended unemployment, temporary assistance for needy families or extended and increased homebuyer tax credit.
(Information courtesy of http://builliten.aarp.org