‘Shovel-Ready’ for 2010

Federal Stimulus


The $797-million stimulus bill the White House pushed through Congress was a rare feat. The spending measure, called the American Recovery and Reinvestment Act, was designed to stimulate the economy by funding schools, parks, infrastructure, and roads. The only hitch was that the projects be “shovel-ready.”

So why the caveat? President Obama and the Democrats would be reluctant to admit it, but the shovel-ready decree was designed to pump up the economy in time for the 2010 Congressional race. By priming the economic pump, the Democrats hope to maintain their majority in the House and Senate. But the plan could be dangerous.

According to Brian Powilatis, managing director of The Executive Board, a research company, 22 percent of the stimulus outlay will take effect by the end of the government’s current fiscal year, which concludes Sept. 30, 2009. Over the next fiscal year, which ends right before the next election, another 44 percent in stimulus activity will be generated, which may be like throwing gasoline onto a fire. With the economy expected to rebound later this year, the added stimulus may overheat the recovery and cause what former Federal Reserve Chairman Alan Greenspan referred to as “irrational exuberance,” a phrase which foreshadowed the 2000-01 recession.