Recovery News

News Organization Bemoans Public's Lack of Knowledge on Issue It Rarely Mentioned

"What if a president cut Americans' income taxes by $116 billion and nobody noticed?" That's the lede on a recent New York Times article, one talking about a tax cut called Making Work Pay (MWP). President Obama's staff was instrumental in crafting and passing the MWP, which was part of the Recovery Act. The tax cut is stealthy, in that its design spreads the benefits out in small amounts, in each paycheck, as opposed to a single, larger payout at tax time. It was so stealthy that, as the Times article notes, few people know that Obama signed into law a tax cut affecting 95 percent of taxpayers. In fact, the MWP was so stealthy the Times barely mentioned it until this week. So why is the Times surprised no one knows about the tax cut?
The MWP was supposed to be the cutting edge of tax policy. Here's how the Times put it:
Faced with evidence that people were more likely to save than spend the tax rebate checks they received during the Bush administration, the Obama administration decided to take a different tack: it arranged for less tax money to be withheld from people's paychecks.
They reasoned that people would be more likely to spend a small, recurring extra bit of money that they might not even notice, and that the quicker the money was spent, the faster it would cycle through the economy.
The actual MWP tax cut came in the form of a credit, which is the second half of the strategy. The tax credit is there to balance out the higher taxes people would have at the end of the year thanks to this withholdings trick (less withholdings = larger incomes = higher taxes, higher taxes - tax credit = lower taxes). This way, people have more money throughout the year, instead of one big check they toss into a bank account and forget about. Think of it as an effort to make the stimulus' tax package as stimulative as possible.
While we're still arguing about just how stimulative the MWP credit actually was, it's hard to argue that few people know about it. Again, the Times:
In a New York Times/CBS News Poll last month, fewer than one in 10 respondents knew that the Obama administration had lowered taxes for most Americans. Half of those polled said they thought that their taxes had stayed the same, a third thought that their taxes had gone up, and about a tenth said they did not know. As Thom Tillis, a Republican state representative, put it as the dinner wound down here, "This was the tax cut that fell in the woods - nobody heard it."
Clearly, the MWP has a PR problem. The Times article doesn't come out and say it, but it's safe to say that a lot of the people they polled were flat out wrong. If 95% of taxpayers received the credit, a lot of people probably had lower taxes. It's not that all these people were lying; they just didn't realize or remember that they in fact received a quite large tax cut in 2009.
If you think about it, the public's ignorance about the MWP credit is pretty sad. The 2009 tax form had a new section, Schedule M, created specifically for the new Obama tax cut, which had the words "Making Work Pay" all over it. To finish your taxes, you had to fill out Schedule M. So if you received a paycheck in 2009, you came into contact with the MWP credit. And yet, no one knows about it. Even worse, people think that Obama did the opposite, and raised their taxes.
So why do people believe the opposite of the truth? Surely the nation's news organizations were giving the tax cut a fair amount of coverage, considering it affected so many people. A quick look at the Times' archives, however, shows that the MWP tax cut received almost no coverage. Since the Recovery Act's passage, the paper has written about the MWP credit only three times. And most of those articles talked about how the new Schedule M was giving taxpayers difficulties when it came to filling out their taxes. Both the MWP tax cut and the Bush tax cuts are expiring at the end of this year, and yet a search for the phrase "Bush tax cuts" on the Times' website returns thousands of hits, but searching for "Obama tax cuts" gives you only one result, and it's this article. The Times even mentioned the estate tax, which a recent report said affected only .6% of deaths in 2008, in 77 articles this past year.  That's a pretty bad disparity in coverage.
And it's not as if the White House wasn't talking about the MWP. A search of the White House website brings up fourteen press briefings in which the MWP was specifically mentioned, eight presidential speeches, twenty-two press releases, nineteen blog posts (including a vociferous defense of the MWP credit), twelve Council of Economic Advisers reports, and at least a couple videos. That's more times than the New York Times, the Washington Post, the Los Angeles Times, Fox News, and MSNBC mentioned it, combined.
In other words, if national news organizations aren't covering Obama's signature tax cut, one which affected almost everyone in the country, it shouldn't be too surprising that no one knows about it. The Times article shouldn't be surprising because it found people who are uninformed. It should be surprising that it took the paper this long to start informing the public on important issues.
Images by Flickr users Joe Shlabotnik and Barack Obama used under a Creative Commons license.

News Organization Bemoans Public's Lack of Knowledge on Issue It Rarely Mentioned

"What if a president cut Americans' income taxes by $116 billion and nobody noticed?" That's the lede on a recent New York Times article, one talking about a tax cut called Making Work Pay (MWP). President Obama's staff was instrumental in crafting and passing the MWP, which was part of the Recovery Act. The tax cut is stealthy, in that its design spreads the benefits out in small amounts, in each paycheck, as opposed to a single, larger payout at tax time. It was so stealthy that, as the Times article notes, few people know that Obama signed into law a tax cut affecting 95 percent of taxpayers. In fact, the MWP was so stealthy the Times barely mentioned it until this week. So why is the Times surprised no one knows about the tax cut?
The MWP was supposed to be the cutting edge of tax policy. Here's how the Times put it:
Faced with evidence that people were more likely to save than spend the tax rebate checks they received during the Bush administration, the Obama administration decided to take a different tack: it arranged for less tax money to be withheld from people's paychecks.
They reasoned that people would be more likely to spend a small, recurring extra bit of money that they might not even notice, and that the quicker the money was spent, the faster it would cycle through the economy.
The actual MWP tax cut came in the form of a credit, which is the second half of the strategy. The tax credit is there to balance out the higher taxes people would have at the end of the year thanks to this withholdings trick (less withholdings = larger incomes = higher taxes, higher taxes - tax credit = lower taxes). This way, people have more money throughout the year, instead of one big check they toss into a bank account and forget about. Think of it as an effort to make the stimulus' tax package as stimulative as possible.
While we're still arguing about just how stimulative the MWP credit actually was, it's hard to argue that few people know about it. Again, the Times:
In a New York Times/CBS News Poll last month, fewer than one in 10 respondents knew that the Obama administration had lowered taxes for most Americans. Half of those polled said they thought that their taxes had stayed the same, a third thought that their taxes had gone up, and about a tenth said they did not know. As Thom Tillis, a Republican state representative, put it as the dinner wound down here, "This was the tax cut that fell in the woods - nobody heard it."
Clearly, the MWP has a PR problem. The Times article doesn't come out and say it, but it's safe to say that a lot of the people they polled were flat out wrong. If 95% of taxpayers received the credit, a lot of people probably had lower taxes. It's not that all these people were lying; they just didn't realize or remember that they in fact received a quite large tax cut in 2009.
If you think about it, the public's ignorance about the MWP credit is pretty sad. The 2009 tax form had a new section, Schedule M, created specifically for the new Obama tax cut, which had the words "Making Work Pay" all over it. To finish your taxes, you had to fill out Schedule M. So if you received a paycheck in 2009, you came into contact with the MWP credit. And yet, no one knows about it. Even worse, people think that Obama did the opposite, and raised their taxes.
So why do people believe the opposite of the truth? Surely the nation's news organizations were giving the tax cut a fair amount of coverage, considering it affected so many people. A quick look at the Times' archives, however, shows that the MWP tax cut received almost no coverage. Since the Recovery Act's passage, the paper has written about the MWP credit only three times. And most of those articles talked about how the new Schedule M was giving taxpayers difficulties when it came to filling out their taxes. Both the MWP tax cut and the Bush tax cuts are expiring at the end of this year, and yet a search for the phrase "Bush tax cuts" on the Times' website returns thousands of hits, but searching for "Obama tax cuts" gives you only one result, and it's this article. The Times even mentioned the estate tax, which a recent report said affected only .6% of deaths in 2008, in 77 articles this past year.  That's a pretty bad disparity in coverage.
And it's not as if the White House wasn't talking about the MWP. A search of the White House website brings up fourteen press briefings in which the MWP was specifically mentioned, eight presidential speeches, twenty-two press releases, nineteen blog posts (including a vociferous defense of the MWP credit), twelve Council of Economic Advisers reports, and at least a couple videos. That's more times than the New York Times, the Washington Post, the Los Angeles Times, Fox News, and MSNBC mentioned it, combined.
In other words, if national news organizations aren't covering Obama's signature tax cut, one which affected almost everyone in the country, it shouldn't be too surprising that no one knows about it. The Times article shouldn't be surprising because it found people who are uninformed. It should be surprising that it took the paper this long to start informing the public on important issues.
Images by Flickr users Joe Shlabotnik and Barack Obama used under a Creative Commons license.

Did the White House Meet its Stimulus Goal?

by Karen Weise

and Michael Grabell
Updated: This post has been updated with the White House's full report.

Oct. 3: This article has been corrected.

The White House plans to release a report today announcing that it met its goal of spending 70 percent of the $787 billion stimulus package by the end of September. If so, there must have been a last-minute push to get more money out the door.

According to early news reports, the administration said it hit its goal by spending $309 billion and issuing $242 billion in tax cuts — exactly reaching the target of $551 billion.

But for that to happen, stimulus spending (excluding tax cuts) during the latter part of the month would have had to run 30 percent higher than average this year, according to our analysis of weekly stimulus spending reports from agencies.

Those reports still aren't in for the last week of September, nor are Treasury Department estimates of tax cuts for the month. We've put in a call to the White House media office asking how they back up their numbers but haven't heard back.

ProPublica has been tracking spending on our Stimulus Progress Bar since the spring of 2009.

Since the beginning of the year, direct stimulus spending has held steady, with about $16 billion a month going to contracts, grants, loans and entitlements. To reach the report's figures, direct spending and entitlements would have jumped $9 billion since Sept. 17.

Tax breaks -- which primarily include credits and incentives -- have also been consistent, averaging $20 billion a month the first half of the year and adding up to $223 billion by the end of June. In July and August, the total increase was only $10 billion -- a slowdown that Treasury attributed to revisions in earlier estimates and a normal drop-off that comes after tax returns are processed.

News stories said the White House claimed tax relief jumped to $242 billion, an increase of $9 billion over the August figures. Treasury has not yet released its quarterly tax estimates, which would include September, and would not provide a timetable for the release.

The Congressional Budget Office had predicted that stimulus spending and tax cuts would have hit $584 billion through September.

If we hear more from the White House, we'll let you know. Meantime, we wanted to highlight the five departments that have yet to spend a quarter of their stimulus funds.

  • The Department of Energy has been the slowest agency to spend its stimulus funds, as many of the agency's programs have been tied up by an onslaught of applications and regulations regarding prevailing wages, American-made materials, increasing electricity rates and environmental clearances. As of Sept. 17, it has spent only $7.6 billion of its $32.7 billion allocation. The slowest energy programs include the $3 billion "clean coal" carbon capture program, the $4.5 billion smart grid program and the $2.5 billion loan guarantee program to support clean energy projects.
  • The Department of Homeland Security has spent less than $500 million of its $2.8 billion allocation. When the stimulus bill was passed, the CBO estimated that Homeland Security would spend more than $1 billion by now. The slow spending comes from nearly every part of the agency. For example, Customs and Border Protection has paid out less than $50 million, even though it was authorized to spend $680 million to modernize ports of entry and deploy other border technology. That program was halted briefly last fall as news media and members of Congress questioned the plan to modernize little-used border stations in Montana and North Dakota instead of busy crossings along the southwest border.
  • The General Services Administration has spent $1.2 billion of its $5.9 billion allocation in stimulus funds primarily to build and update federal buildings. That's basically on target to the CBO's estimate of how fast the GSA would pay out funds.
  • The National Science Foundation has spent almost $600 million of its $3 billion allocation to support science and engineering research and education. When the bill was passed, the CBO estimated that the NSF would have spent $1.6 billion by now.
  • The Commerce Department has spent $1.6 billion of its $7.9 billion. The slow progress is largely a result of the administration's effort to expand broadband access, a program that was significantly enlarged in the stimulus package. The CBO estimated Commerce would spend $840 million on broadband by now, but it's actually paid out about a tenth of that.

Update: The White House released the full report, which says, "As of September 30, 2010, agencies and Treasury project that this goal will be met... Information regarding actual year end outlays and tax relief provided will be posted on Recovery.gov on October 8, 2010."


Correction: Because of a typographical error, an earlier version of this post mistakenly said the administration claimed stimulus spending of $309 million. The correct figure is $309 billion.

Putting a Better Face on Economic Stimulus

The latest economic data on the Recovery Act from the Congressional Budget Office indicate that, by at least two important metrics -- gross domestic product (GDP) and unemployment -- it is in fact working (see here, here, here, and here for more). Yet, only 33 percent of Americans think the Recovery Act "helped the jobs situation."

The Recovery Act was billed as economic stimulus measure, but some how the number of letters in the word "stimulus" has been reduced to four.

Surely opponents of Keynesian economics have been working overtime to tar the Recovery Act and the word "stimulus" as economic and budgetary abominations, but as The New Yorker's James Surowiecki points out, there are more factors at work than just a clever PR campaign.

The hostility has numerous sources. Many voters conflate the stimulus bill with the highly unpopular bailouts of the banking sector and the auto industry; Republicans have done a good job of encouraging such misconceptions...Also, the stimulus—which, to begin with, was too small to completely offset the economy's precipitous drop in demand—was oversold. The Administration's forecasts about the recession (particularly regarding job losses) were too optimistic, and so its promises about what the stimulus would accomplish set the public up for disappointment.

Surowiecki also notes that "[p]aradoxically, the very things that made the stimulus more effective economically may have made it less popular politically." Two of those being 1) aid to states, which prevented mass layoffs and 2) tax breaks spread out over the year rather than paid in one lump sum.

"Stimulus" is a dirty word, and the Recovery Act is legis non grata, yet 57 percent of Americans think "policymakers in Washington" should spend more to create jobs and 74 percent agree that the administration should "create more jobs even if it means less deficit reduction."

Seems to me that this is the intersection of good policy and good politics: push money into the economy but call it something else, something like the Pulling Up People Performing in Economic Stress Act of 2010, or just PUPPIES. Who could hate PUPPIES?

Image by Flickr user ThrottleUK used under a Creative Commons license.

Putting a Better Face on Economic Stimulus

The latest economic data on the Recovery Act from the Congressional Budget Office indicate that, by at least two important metrics -- gross domestic product (GDP) and unemployment -- it is in fact working (see here, here, here, and here for more). Yet, only 33 percent of Americans think the Recovery Act "helped the jobs situation."

The Recovery Act was billed as economic stimulus measure, but some how the number of letters in the word "stimulus" has been reduced to four.

Surely opponents of Keynesian economics have been working overtime to tar the Recovery Act and the word "stimulus" as economic and budgetary abominations, but as The New Yorker's James Surowiecki points out, there are more factors at work than just a clever PR campaign.

The hostility has numerous sources. Many voters conflate the stimulus bill with the highly unpopular bailouts of the banking sector and the auto industry; Republicans have done a good job of encouraging such misconceptions...Also, the stimulus—which, to begin with, was too small to completely offset the economy's precipitous drop in demand—was oversold. The Administration's forecasts about the recession (particularly regarding job losses) were too optimistic, and so its promises about what the stimulus would accomplish set the public up for disappointment.

Surowiecki also notes that "[p]aradoxically, the very things that made the stimulus more effective economically may have made it less popular politically." Two of those being 1) aid to states, which prevented mass layoffs and 2) tax breaks spread out over the year rather than paid in one lump sum.

"Stimulus" is a dirty word, and the Recovery Act is legis non grata, yet 57 percent of Americans think "policymakers in Washington" should spend more to create jobs and 74 percent agree that the administration should "create more jobs even if it means less deficit reduction."

Seems to me that this is the intersection of good policy and good politics: push money into the economy but call it something else, something like the Pulling Up People Performing in Economic Stress Act of 2010, or just PUPPIES. Who could hate PUPPIES?

Image by Flickr user ThrottleUK used under a Creative Commons license.

Putting a Better Face on Economic Stimulus

The latest economic data on the Recovery Act from the Congressional Budget Office indicate that, by at least two important metrics -- gross domestic product (GDP) and unemployment -- it is in fact working (see here, here, here, and here for more). Yet, only 33 percent of Americans think the Recovery Act "helped the jobs situation."

The Recovery Act was billed as economic stimulus measure, but some how the number of letters in the word "stimulus" has been reduced to four.

Surely opponents of Keynesian economics have been working overtime to tar the Recovery Act and the word "stimulus" as economic and budgetary abominations, but as The New Yorker's James Surowiecki points out, there are more factors at work than just a clever PR campaign.

The hostility has numerous sources. Many voters conflate the stimulus bill with the highly unpopular bailouts of the banking sector and the auto industry; Republicans have done a good job of encouraging such misconceptions...Also, the stimulus—which, to begin with, was too small to completely offset the economy's precipitous drop in demand—was oversold. The Administration's forecasts about the recession (particularly regarding job losses) were too optimistic, and so its promises about what the stimulus would accomplish set the public up for disappointment.

Surowiecki also notes that "[p]aradoxically, the very things that made the stimulus more effective economically may have made it less popular politically." Two of those being 1) aid to states, which prevented mass layoffs and 2) tax breaks spread out over the year rather than paid in one lump sum.

"Stimulus" is a dirty word, and the Recovery Act is legis non grata, yet 57 percent of Americans think "policymakers in Washington" should spend more to create jobs and 74 percent agree that the administration should "create more jobs even if it means less deficit reduction."

Seems to me that this is the intersection of good policy and good politics: push money into the economy but call it something else, something like the Pulling Up People Performing in Economic Stress Act of 2010, or just PUPPIES. Who could hate PUPPIES?

Image by Flickr user ThrottleUK used under a Creative Commons license.

Putting a Better Face on Economic Stimulus

The latest economic data on the Recovery Act from the Congressional Budget Office indicate that, by at least two important metrics -- gross domestic product (GDP) and unemployment -- it is in fact working (see here, here, here, and here for more). Yet, only 33 percent of Americans think the Recovery Act "helped the jobs situation."

The Recovery Act was billed as economic stimulus measure, but some how the number of letters in the word "stimulus" has been reduced to four.

Surely opponents of Keynesian economics have been working overtime to tar the Recovery Act and the word "stimulus" as economic and budgetary abominations, but as The New Yorker's James Surowiecki points out, there are more factors at work than just a clever PR campaign.

The hostility has numerous sources. Many voters conflate the stimulus bill with the highly unpopular bailouts of the banking sector and the auto industry; Republicans have done a good job of encouraging such misconceptions...Also, the stimulus—which, to begin with, was too small to completely offset the economy's precipitous drop in demand—was oversold. The Administration's forecasts about the recession (particularly regarding job losses) were too optimistic, and so its promises about what the stimulus would accomplish set the public up for disappointment.

Surowiecki also notes that "[p]aradoxically, the very things that made the stimulus more effective economically may have made it less popular politically." Two of those being 1) aid to states, which prevented mass layoffs and 2) tax breaks spread out over the year rather than paid in one lump sum.

"Stimulus" is a dirty word, and the Recovery Act is legis non grata, yet 57 percent of Americans think "policymakers in Washington" should spend more to create jobs and 74 percent agree that the administration should "create more jobs even if it means less deficit reduction."

Seems to me that this is the intersection of good policy and good politics: push money into the economy but call it something else, something like the Pulling Up People Performing in Economic Stress Act of 2010, or just PUPPIES. Who could hate PUPPIES?

Image by Flickr user ThrottleUK used under a Creative Commons license.

The Recovery Act Failed! Or Not

If one were to listen to most conservative politicians and pundits these days, you'd come away with the impression that the Recovery Act has failed. It hasn't created any jobs and it hasn't helped the economy, so the narrative goes. For instance, here are a few quotes from the past couple weeks:

"All this 'stimulus' spending has gotten us nowhere." -House Minority Leader John Boehner (R-OH)

"[The stimulus] is simply not working." -Greta Van Susteren

"Everyone understands it was a payoff, not a jobs-creator." -Charles Krauthammer

"More people believe that Elvis Presley is alive than the stimulus created jobs." -Rep. Kevin McCarthy (R-CA)

"[The Recovery Act] increased the number of full-time-equivalent jobs by 2.0 million to 4.8 million compared with what would have occurred otherwise." -Congressional Budget Office

Whoops, sorry, that last one was actually a quote from the CBO's new report on the Act's effects on the economy. The independent, non-partisan institution reported that, contrary to what many seem to think, the Recovery Act raised real GDP by between 1.7 and 4.5 percent, lowered unemployment by between .7 and 1.8 percentage points, and increased the number of people employed by between 1.4 million and 3.3 million. And that was just looking at what happened between April and June 2010.

In other words, the Recovery Act hasn't failed; on the contrary, it's had an immense effect on the nation's economy. The fact that we're still plagued by high unemployment and a faltering economy indicates that the Act wasn't nearly big enough, not that it hasn't worked.

Oh, and for those keeping score at home, the CBO report also revised downwards the cost of the Recovery Act. The total price tag will be about $814 billion, down from the CBO's earlier estimate of $867 billion.

Image by Flickr user calamity1 used under a Creative Commons license.

The Recovery Act Failed! Or Not

If one were to listen to most conservative politicians and pundits these days, you'd come away with the impression that the Recovery Act has failed. It hasn't created any jobs and it hasn't helped the economy, so the narrative goes. For instance, here are a few quotes from the past couple weeks:

"All this 'stimulus' spending has gotten us nowhere." -House Minority Leader John Boehner (R-OH)

"[The stimulus] is simply not working." -Greta Van Susteren

"Everyone understands it was a payoff, not a jobs-creator." -Charles Krauthammer

"More people believe that Elvis Presley is alive than the stimulus created jobs." -Rep. Kevin McCarthy (R-CA)

"[The Recovery Act] increased the number of full-time-equivalent jobs by 2.0 million to 4.8 million compared with what would have occurred otherwise." -Congressional Budget Office

Whoops, sorry, that last one was actually a quote from the CBO's new report on the Act's effects on the economy. The independent, non-partisan institution reported that, contrary to what many seem to think, the Recovery Act raised real GDP by between 1.7 and 4.5 percent, lowered unemployment by between .7 and 1.8 percentage points, and increased the number of people employed by between 1.4 million and 3.3 million. And that was just looking at what happened between April and June 2010.

In other words, the Recovery Act hasn't failed; on the contrary, it's had an immense effect on the nation's economy. The fact that we're still plagued by high unemployment and a faltering economy indicates that the Act wasn't nearly big enough, not that it hasn't worked.

Oh, and for those keeping score at home, the CBO report also revised downwards the cost of the Recovery Act. The total price tag will be about $814 billion, down from the CBO's earlier estimate of $867 billion.

Image by Flickr user calamity1 used under a Creative Commons license.

The Recovery Act Failed! Or Not

If one were to listen to most conservative politicians and pundits these days, you'd come away with the impression that the Recovery Act has failed. It hasn't created any jobs and it hasn't helped the economy, so the narrative goes. For instance, here are a few quotes from the past couple weeks:

"All this 'stimulus' spending has gotten us nowhere." -House Minority Leader John Boehner (R-OH)

"[The stimulus] is simply not working." -Greta Van Susteren

"Everyone understands it was a payoff, not a jobs-creator." -Charles Krauthammer

"More people believe that Elvis Presley is alive than the stimulus created jobs." -Rep. Kevin McCarthy (R-CA)

"[The Recovery Act] increased the number of full-time-equivalent jobs by 2.0 million to 4.8 million compared with what would have occurred otherwise." -Congressional Budget Office

Whoops, sorry, that last one was actually a quote from the CBO's new report on the Act's effects on the economy. The independent, non-partisan institution reported that, contrary to what many seem to think, the Recovery Act raised real GDP by between 1.7 and 4.5 percent, lowered unemployment by between .7 and 1.8 percentage points, and increased the number of people employed by between 1.4 million and 3.3 million. And that was just looking at what happened between April and June 2010.

In other words, the Recovery Act hasn't failed; on the contrary, it's had an immense effect on the nation's economy. The fact that we're still plagued by high unemployment and a faltering economy indicates that the Act wasn't nearly big enough, not that it hasn't worked.

Oh, and for those keeping score at home, the CBO report also revised downwards the cost of the Recovery Act. The total price tag will be about $814 billion, down from the CBO's earlier estimate of $867 billion.

Image by Flickr user calamity1 used under a Creative Commons license.

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