Poll results show that 56% of Americans oppose the federal stimulus bill from last year. This comes despite the fact that independent evaluations of The American Recovery and Reinvestment Act of 2009 (the official name for the federal stimulus bill) show that it has added 1.6 million to 1.8 million jobs and the total impact will be +2.5 million jobs.
Majority opposition can be explained in large part by the reality that 14.8 million Americans are unemployed, and by the public perception that stimulus money is being wasted. If you're curious where the money is going, recovery.gov allows anyone to track the spending of stimulus money and report fraud, waste and abuse.The site also has a stimulus-funded jobs search page.
While some stimulus money may have been wasted, the bottom line is that it has created jobs--a good thing. However, these jobs come at a cost. The Congressional Budget Office projects that the federal deficit for 2010 will be $1.3 trillion, or 9.2% of GDP--the second highest total since WWII. For 2010, interest payments on the total deficit of more than $12 trillion will be $207 billion; by 2020 the interest payment will be $723 billion.
The deficit has risen dramatically because federal spending has increased (the stimulus, unemployment benefits, etc.) and incoming revenues have decreased (lower income tax revenue because of the recession, tax breaks, etc.).
Though it's good to see that federal spending is providing jobs, the spending has to stop somewhere. By 2020, U.S. debt held by the public--public meaning anyone or anything that isn't the U.S. government itself--will equal $15 trillion, or 67% of GDP. It already equals 53% of GDP and it's hard to see how that will be sustainable.
Common financial advice says that an individual shouldn't have more than a 36% debt-to-income ratio and shouldn't spend more than they make. The federal government might want to take notice--here's the break down of the federal budget.
Let me know your thoughts on the stimulus, and how to reduce federal spending while keeping public services.
--Jens
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