October 1, 2010 / 11:25 PM / 9 years ago

UPDATE 1-White House defends economic stimulus plan

* Recovery Act favorite target of Republicans

* Disappointment over public skepticism

* Republicans find target in 8 percent unemployment goal

(Inserts McConnell comment, paragraphs 6-7)

By Patricia Zengerle

WASHINGTON, Oct 1 (Reuters) - President Barack Obama’s $814 billion economic stimulus plan is meeting its targets for spending and job creation, White House officials said on Friday, however unpopular it may be with the public.

Seventy percent of the plan’s funds were paid out by Sept. 30, with $308 billion spent and $243 billion in tax breaks provided, they said, adding that every spending deadline Congress set for the funds was met on time or ahead of schedule, with little fraud or abuse.

Polls have shown the plan is unpopular with much of the public and has fallen short of expectations for the economy, even though the nonpartisan Congressional Budget Office estimates it boosted real gross domestic product in the second quarter by up to 4.5 percent and raised employment by up to 3.3 million jobs.

Jared Bernstein, chief economic adviser to Vice President Joe Biden, and former White House economist Christina Romer wrote a paper in early 2009 contending that the stimulus would cap the jobless rate at 8 percent.

With the unemployment rate at 9.6 percent in August and expected to have inched up to 9.7 percent in September — data will be released next week — that paper has given Republicans a powerful weapon to argue that the Recovery Act failed.

“The administration predicted that unemployment wouldn’t rise above 8 percent if the trillion-dollar stimulus became law,” Senate Republican Leader Mitch McConnell said.

“We know how that turned out: Unemployment, now at 9.6 percent, has hovered near double digits since the stimulus passed; we took on an additional trillion dollars in debt, and Americans’ confidence in the administration’s economic arguments never recovered.”


The administration contends that the nation would have been far worse without the plan, given the dire state of the U.S. economy when Obama took office in early 2009.

“No piece of legislation would have been capable of filling that hole,” White House spokesman Robert Gibbs said.

However, the concept has proven difficult to sell to the public, and Republicans in the House of Representatives recently vowed to cancel all unspent money from the economic stimulus plan.

Republicans are expected to cut into the Democratic majorities in the House and Senate in next month’s congressional elections, although Democrats have been heartened by a modest boost in their national poll numbers, as Obama and administration officials turned up their attacks on Republican economic policies.

Administration officials said on Friday that very little stimulus money — a few billion dollars, depending how it was calculated — was actually free to be spent.

Much of the $233 billion that remains in the fund has been promised but not yet formally spent, and part of it is in tax relief, they said.

Ed DeSeve, Obama’s senior adviser for Recovery Act Implementation, said his only concern about the act was the failure to communicate.

“If we were disappointed with anything, it’s our inability to really get the message out exactly the way the American people want to hear it,” he said. (Editing by Paul Simao)

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