How to Spend the Stimulus

In fact, the austerity scolds have found surprisingly few specific outrages. Republicans released a list that mocked $75 million for "smoking-cessation activities," which are actually a terrific way to hold down the long-term health costs that threaten the Treasury's long-term solvency, as well as $6 billion "to turn federal buildings into 'green' buildings," with the telling scare quotes deriding the idea of creating short-term jobs for retrofitters while reducing long-term federal energy costs and emissions. There has been a sensible push to add even more money for mass transit, which reduces energy use, increases the competitiveness of metropolitan areas and helps working families. Expanded unemployment benefits and food stamps will be excellent stimulus--and they're desperately needed right now. In general, most of the current proposals--though not all--aim to limit the new spending to the next two years.

Obama has called for an earmark-free stimulus package, so the legislation shouldn't have too many silly waterslides or Mafia museums or cranberry subsidies in its text. Instead, Congress will dole out hundreds of billions of dollars to states and agencies. But that's where the real waste is going to be. There's $30 billion for highways, funneled through state transportation departments, which love to build unsustainable sprawl roads to nowhere. There's $4.5 billion for the Army Corps of Engineers, which is addicted to projects that destroy wetlands and induce development in vulnerable floodplains. There's $14 billion for school modernization, $100 million for rural business loans, $8.4 billion in "state- and tribal-assistance grants"--and who can say how it will all be spent? (See the top 10 financial collapses of 2008.)

Well, Congress can say. For example, Commerce Committee chairman Henry Waxman inserted language into the House version that limited energy grants to states that give their utilities incentives to promote energy efficiency. And Congress could make sure the money is spent productively by attaching a few general strings to the stimulus dollars. For instance, there should be "fix it first" provisions to prioritize repairs to highways, levees and other infrastructure over new construction, which would create more jobs while reducing future federal obligations. We do need to rescue states to prevent them from raising taxes and firing workers, but just as it was crazy to let bailed-out banks and automakers spend our money however they pleased, it's also crazy to give carte blanche to bailed-out states. But the Senate summary noted that "funds are distributed whenever possible through existing formulas and programs," a polite way of saying reforms are not welcome here.

The real question, then, is not whether Obama should push to use the stimulus to promote his long-term priorities but whether he will. He has said repeatedly that he wants to invest our children's money wisely, but he's also eager to blast money into the economy quickly, attract bipartisan support and let Congress work its will. So it's not clear how hard he'll push to fund his long-term agenda. But he should ignore the partisan gripes that the stimulus is becoming a "Christmas tree." Congress is about to toss almost $1 trillion into the economy, which means that any stimulus is going to be a Christmas tree, no matter where the gifts are hidden. And in November, the U.S. chose its Santa. This is his best chance to decide who gets the goodies and who gets the lump of coal.

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