Incredible Shrinking Stimulus Needs Part II
Local government cuts are canceling out federal package
By Rob Quinn,  Newser Staff
Posted Dec 3, 2009 3:32 AM CST
A furlough sign is posted outside a professor's door at the California State University East Bay in Hayward, Calif.    (AP Photo/Eric Risberg)

(Newser) – The American economy badly needs a second stimulus package, but the false belief that the government has already stimulated the economy to the tune of $787 billion is standing in the way, writes Harold Meyerson. When deferred spending and the effect of state and local government cuts are taken into account, the real figure is more like an insufficient $341 billion, Meyerson writes in the Washington Post.

America's stimulus package works out at a much lower share of GDP than other developed nations because local governments elsewhere are funded nationally. In the US, however, many localities have been forced to adopt growth-stifling measures like tax and job cuts, effectively draining away the intended benefits of the federal stimulus package. "We need a big second stimulus," Meyerson concludes, since our system" doesn't let us plug the leaks"
 

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