As the stock market continues on in a downward spiral and the economy barrels on in recession, despite the efforts of the government, University administration, faculty and students weigh in on the stimulus package, the economy and the future of the nation and the University.
The American Recovery and Reinvestment Act is a partly Keynesian stimulus package in which government spending is intended to replace the continuously diminishing private sector consumer and business spending, University Professor of Economy Neil Sheflin said.
“The stimulus package will help the nation and the state. The effect will primarily be to keep the economic climate from…worsening, rather than improving it dramatically and rapidly,” he said.
Since President Obama signed the American Recovery and Reinvestment Act last February, 34 percent of U.S. voters believe the stimulus package will help the economy while 32 percent think it will harm it, according to a Rasmussen Report conducted through a telephone survey.
Last week’s report had the figures at 38 percent for to 29 percent against.
“I agree with some parts but not all parts. I think that corporations and people should be held responsible for their bad decision, that’s what got us into this mess…that’s what capitalism is all about,” School of Arts and Sciences first-year student Brett Cotler said.
Support for education will include American Opportunity Tax Credit which allows a $2,500 tax credit for families with children in Universities, $10.4 billion in research to National Institutes for Health among other grants to other institutions and $53.6 billion State Fiscal Stabilization Fund that will help provide support for public K-12 and higher education across the nation.
“I worked hard in high school and got good grades, I’m on academic scholarship. Not all the money is going towards Rutgers, it’s going to a lot of institutions so they can take on more [jobs],” Cotler said.
The package also funds other initiatives that intersect the work of public research universities like Rutgers, including worker training in emerging industries, transportation projects, community development, and environmental cleanup, to name a few, McCormick said.
“It sounds very nice at first, when you look at the details, businesses made a lot of mistakes, it doesn’t make sense to [reward] them. There are a lot of different places that need money,” Blank said.
After partisan debate about what the stimulus package should include a compromised was reached between supply-side and short-run economic policies.
It includes both personal and business tax cuts to encourage spending. It also contains many items that are not short-run stimulus related, Sheflin said.
“I don’t believe the tax cuts will have the intended short run effect of increasing spending, although there is considerable debate about this amongst economists,” he said.
The signing of the federal stimulus package comes at a difficult time for New Jersey. On the same day, Governor Corzine announced $3.6 billion in cuts to the current-year state budget to reflect the continuing decline in state revenues resulting from the global recession, McCormick said.
“It’s affected my family a lot; we’re going through a tough time right now. Every time, I go home my dad is ranting about it. It’s not easy for anyone,” School of Environmental and Biological Sciences sophomore Anna Blank said.
Both the nation and the state will see deteriorating economic conditions, particularly rising unemployment through at least the end of 2009. The state will see its budget get tighter, such as the $3.6 billion deficit it recently had to deal with, due to tax revenues. The package will slow the deteriorating economic situation but not reverse it quickly, Sheflin said.
“Some of the aspects of the stimulus I agree with, over the large bailouts for large corporations, while they are necessary to prevent massive amounts of people from being unemployed, at the same time corporations should be held accountable,” Cotler said.
Governor Jon S. Corzine said the state’s budget is in stress and that cuts are possible but will not be known until his budget address on March 10th. The effect of the stimulus package is not yet known since how the funds will be administrated and allocation is still being worked out, Vice President for University Budgeting Nancy Winterbauer said.
The state will be forced to make further cuts in all aspects of its budget and while further federal stimulus is likely, it won’t reverse the declining state economic situation. While the University may see some increased research funding and student financial aid from the package, state aid is likely to fall, Sheflin said.
“I believe strongly that a ‘Keynesian’ spending bill is required in the current situation. I’m afraid this bill is too small, complicated and diffuse to have the needed effect,” Sheflin said. “The current problem is … confidence and expectations about the economy. An effective stimulus package should have improved consumer and business confidence.”
“I’m optimistic … hopefully they have a good head on their shoulders and our nation will be able weather the storm and once we get through, everything will be on the up and up,” Cotler said.
Based on what policymakers learned from history, Sheflin believes the administration should be doing more.
“The current recession is exacerbated and partially caused by the ongoing financial crisis and it is likely that we will see much more federal government expenditures to prop up and restart the financial system. I am afraid that we are all in for an unpleasant several years,” he said.
U. affiliates weigh in on stimulus package, economy
Published: Wednesday, March 4, 2009
Updated: Wednesday, March 4, 2009
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