August 7, 2009

Government spending meets mixed reviews

Pundits, politicians and economists are debating the effects of the $787 billion U.S. stimulus spending plan six months after it was signed into law.

White House officials have declared the spending plan a success, although its effect on the unemployment rate has been delayed as the first wave of funding went to tax cuts, health care and an extension of unemployment benefits, The New York Times reported Friday.

Still, Allen Sinai, chief economist at Decision Economics said, the signs of the stimulus are there.

Government -- federal, state and local -- is helping take the economy from recession to recovery. I think it's the primary contributor, he said.

Donald Marron, economic adviser to former President George W. Bush, said, it's hard to believe the stimulus program has had that much direct effect.

Christina Romer, head of the White House Council of Economic Advisers, said Thursday the stimulus plan added two percentage points to the gross domestic product in the second quarter, but economists say that estimate is high, the Times reported.

And some of the stimulus spending has been hoarded. Recent reports show personal savings has increased, while spending has declined.