Obamas $787-Billion Gamble

By Dale McFeatters

Scripps Howard News Service

That sprawling $787-billion stimulus bill was a gamble that President Barack Obama and the congressional Democrats had to make. The alternative was to stand aside and risk the economy going into free fall.

The principal economic weapon for battling recession ― interest-rate cuts by the Federal Reserve ― has been exhausted, and the $700 billion bank bailout will need time to work.

In a curious piece of electoral calculus, the Republicans, all but the three senators who voted for it, are politically invested in seeing the bill fail.

The Republicans had a point in how difficult the Democrats, especially in the House, were to deal with, but the GOP only seemed to have a single idea ― tax cuts ― and after their free-spending ways under President George W. Bush, the party is just not credible on the deficit.

That said, the stimulus bill is hardly an elegant piece of legislation. It does include genuine stimulus: $48 billion for transportation and public works; $53.6 billion in aid to the states; $40 billion in extended unemployment benefits; $86.6 billion for Medicaid ― all of these funds likely to be spent or committed fairly quickly.

Despite Republican grumbling, over a third of the bill is in tax cuts and credits. It includes a $70 billion fix in the alternative minimum tax, which is arguably not stimulus but is something Congress does every year, so there is something to be said for getting it over with.

The bill also contains many programs, like $19 billion for electronic medical records, that may be good ideas but aren't stimulus and should have been tackled through the normal legislative process.

Lost in the political squabbling over the stimulus package is that if leveraging private-sector money through federal guarantees is taken into consideration, it is the smallest of the three major recession-fighting measures the government plans.

The Treasury and the Fed plan to expand a program to support lending for consumer and business loans, student loans and credit-card debt to as much as $1 trillion. And the Treasury still plans to take up to $1 trillion in bad assets off the books of financial institutions.

Passage of the bill was a significant victory for Obama, especially coming soon after taking office. But, as the saying goes, now comes the hard part ― making it work. And then comes the even harder part ― paying for it all.

Dale McFeatters is an editorial writer of Scripps Howard News Service (www.shns.com).