— ELKHART, Ind. - When President Barack Obama last visited Elkhart, Ind., in February, he was trying to generate popular support for a massive economic stimulus package, then facing growing opposition in Congress. It was his third visit to the economically hard-hit area in less than a year, and he used his visit to tout the benefits of his program to Elkhart and the nation.
“I promised you (during the election campaign) that, if elected I’d do everything I could to help this community recover," he told a cheering crowd. "That’s why I came back today, because I intend to keep my promise.”
At the time, Obama listed a number of promises he has made. Some of them involved specific measures in the stimulus package. Others were broader pledges to put the economy in Elkhart —and the nation — back on track.
As Obama prepares to return to Elkhart County Wednesday, here is an assessment of the progress he has made in fulfilling some of his promises.
In his February speech, he touted the stimulus plan for providing "tax relief for 95 percent of American workers."
"So that you who are being pinched, even if you still have a job, with rising costs, while your wages and incomes are flatlined, you'll actually have a little bit of extra money at the end of the month to buy the necessities for you and your children," he said.
The $787 billion stimulus package ultimately passed included $287 billion — about a third of the total — for temporary tax breaks. This included a broad range of targeted cuts and credit, the biggest of which, the “Making Work Pay” tax credit of up to 6.2 percent of earnings, provided up to $500 per worker. The bill cut the amount of money withheld for taxes from weekly paychecks, releasing the money immediately to individuals and families and encouraging them to spend it.
The rest of the tax relief was highly targeted, including earned-income tax credits for lower-income families, incentives for energy-related home improvements and a break for first-time homebuyers.
“If you add in the checks that old people got out of the stimulus and the fact that the stimulus bill reduced the taxation of unemployment benefits, Obama has cut taxes for a large fraction of the population — pretty close to 95 percent,” said Gerald Prante, senior economist at the Tax Foundation. “And I would say that he's basically held true to that campaign promise.”
One caveat: The promise applies only to 95 percent of “American workers.” That doesn’t include the more than six million people who have lost their jobs (and therefore don’t pay wage taxes) since the recession began.
Obama’s critics note that this is one of the hardest promises to assess because there is no way to measure how many jobs are “saved.” To do so, you’d have to poll employers and ask them how many people they decided not to fire because the stimulus package came along.
On the “creating” side of the employment ledger, the Obama administration still has a huge job ahead of it. Jobs are still being lost at a pace of roughly half a million a month. Assuming that pace tapers off by year-end, as some economists are predicting, as many as 7.5 million jobs will have been lost to this recession. Unless and until the majority of those people can be put back to work — with wages to fuel the consumer spending that makes up two-thirds of the U.S. economy, future “growth” won’t feel like good times to millions of sidelined workers.
Job losses in states like Indiana — where roughly a quarter of the work force is employed in construction and manufacturing — have continued since February, as the auto and commercial real estate industries continue to contract.
Since Obama's speech in February, at least 66,438 Hoosiers have lost their jobs, based on June figures, the latest available. Elkhart has fared a bit better: Employment is up by 762 jobs.
The stimulus package did help extend unemployment benefits, but the payments and length of extension vary by state. The stimulus package provided money to states that choose to keep paying after 26 weeks.
But some 18 states have exhausted their unemployment war chests, which are funded by payroll taxes, and are now borrowing from the federal government to keep the checks flowing to laid-off workers. Congress recently moved to set aside another $7.5 billion to keep these funds from running out of money.
To pay that money back and keep up with the rise in jobless claims, states have begun to raise the premiums they charge employers. That could make it harder for companies to add new workers to the payroll.
The oversight board is up and running, including 10 inspectors general from the federal departments through which the stimulus money will be flowing. Each inspector general’s office is staffed with an army of auditors who are well-versed in tracking the spending of taxpayer dollars.
But much of the money has been turned over to the states, which have broad discretion on how to spend it. More work needs to be done at the state level, according to a July report by the General Accountability Office.
“Current guidance does not achieve the level of accountability needed to effective respond to the Recovery Act risks,” said the GAO.
Recovery.gov is a wealth of information about the many moving parts of the stimulus package. The site includes a state-by-state, city-by-city tally of funds that have been approved and spent so far, along with a breakdown of which federal departments and agencies are spending your money.
The site also demonstrates the difficulties the Obama administration faces getting the stimulus money flowing. On the one hand, strict oversight of spending is helping cut down on waste and abuse. On the other hand, while billions of dollars in spending have been approved, the actual flow of money has been relatively slow. As msnbc.com reported, that has blunted the impact of the stimulus on boosting the economy.
"It's not just the jobs that will benefit Indiana and the rest of America, it's the work people will be doing: rebuilding our roads, our bridges, our dams, our levees, roads like U.S. 31 here in Indiana that Hoosiers can count on, that connect small towns and rural communities to opportunities for economic growth."
Obama put his finger on a major pain point when he cited U.S. 31, according to Elkhart County highway department manager Jeff Taylor. It’s the major corridor for the flow of goods and services between the smaller counties in the northern part of the state and Indianapolis, the main commercial hub. And it needs work.
“U.S. 31 is nothing but traffic signals,” said Taylor. “That corridor is under design and under construction. But it just at the very beginning (of being upgraded.)”
Though stimulus money may help move the project along, it's a long way from improving the movement of Elkhart's goods and services downstate. According to the state Department of Transportation, the northern portion of the project that would speed traffic to Elkhart is scheduled for completion in 2013.