If you believe the political advisors currently wringing their hands over this issue, the U.S. stimulus is stymied. In one sector, municipal wastewater, spending has slowed to a crawl; a total of 17 jobs have been created thus far.
Among those in the business of politicking, consensus splits along party lines as to what to do. Some blame Buy American, and argue it should be rethought. (That is happening as I write. Currently, bureaucrats at the Office of Management and Budget, the body that oversees stimulus fund disbursement, are trying to figure out what the latest guidance on Buy American compliance will be. That’s good, in that the OMB actively solicited feedback from business groups for this round, including the U.S. Chamber of Commerce. However, it will slow the process of getting those funds out into the economy further).
Others, including Democratic presidential advisors such as Laura Tyson, saythat there should be a second stimulus package an idea that falls on less-than-receptive ears amongst those concerned the level of spending the country has already committed to is too high.
Congressional Democrats and White House economic advisor Lawrence Summersurge patience, pointing out that stimulus spending is designed to roll out over several years.
That’s true, acknowledges Maya MacGuineas, the Washington, D.C.-based president of the Committee for a Responsible Federal Budget, a fiscal watchdog. But according to her, more thought should have been given from the start to getting funds into the economy as fast as possible. Some re-thinking of timelines might be in order. “They should be putting money into food stamps, assistance for the unemployed; places where it is likely to be spent immediately,” she argues.
Only one thing is clear right now: as the debate over how best to get money into the economy rages, stimulus funds go unspent and jobs go uncreated.
Meanwhile, many eyes are on CIT Group, one of the country’s largest small-business lenders. A storm of media reports yesterday indicated the company is considering bankruptcy. That drove the stock down 94% to close at US$1.35, and prompted fresh talk in D.C. of a new bailout for small business lenders.
Small wonder the Chinese Investment Corp. (CIC) is actively seeking out equity plays, like the 17% stake it picked up June 26 in Vancouver-based Teck Cominco, to diversify away from the greenback.