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Why hasn't the stimulus trickled down?
A trillion-dollar stimulus
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Kai Ryssdal: If you managed to keep an eye on the business and economics pages over the long weekend, perhaps you noticed the rising tide of stimulus news. New stimulus news, that is. There has been a steady stream of commentary and punditry calling for another shot of government spending. Even though most of the nearly $800 billion that Congress and President Obama approved in February still has not been spent. From Washington, Marketplace's Steve Henn has more.
STEVE HENN: If you talk to James Galbraith these days, he's feeling vindicated. Back in January, Galbraith was arguing that the administration's proposal for a nearly one-trillion dollar economic stimulus package was too small. And now Galbraith -- a liberal-leaning economist at the University of Texas -- says rising unemployment and a stubbornly stagnant economy are proving him right. Still...
JAMES GALBRAITH: I am not going to gloat too much though because there were political considerations.
He believes President Obama pushed for the biggest stimulus package that was politically possible, but...
GALBRAITH: The difficulty here that it is not quite big enough and not quite soon enough.
And even shovel-ready projects take months to get started. And Dean Baker at the Center for Economic Policy Research says infrastructure projects are not enough. He'd like Congress to offer direct aid to state and local governments.
DEAN BAKER: So they don't have to make the cutbacks that so many state and local governments are making now that's going to make the recession much worse.
But these economic concerns are running headlong into an unpleasant political reality on Capitol Hill.
NORM ORNSTEIN: At the moment there is no appetite for another stimulus bill.
Norm Ornstein follows Congress at the American Enterprise Institute.
ORNSTEIN: You've got an awful lot of fiscally conservative Democrats who have grown increasingly uneasy about the hole we have dug.
Senior democratic aids in the House say for the moment there are no plans for a new stimulus bill. Instead, they're focusing on getting money from the last bill out the door faster.
In Washington, I'm Steve Henn for Marketplace.
RYSSDAL: For those who are keeping track, by the by, a new stimulus package -- if there is one -- would be the third, not the second. Remember Congress and the Bush administration passed the first one back in the spring of '08.
It hasn't trickled down because of productivity increases. Since we can do more with less, the money goes in at the top and then stays there. Why hire when you can automate further or require more effort from your current pool of workers? The wealth that gets stranded at the top goes overseas to private accounts, luxury goods, and resorts and thus not into the US economy.
A rising tide lifts all boats from below, the stuff that "trickles down" is insufficient to lift anything. You fertilize plants at their roots, not at their tips
