AP: Centralized Planning Of Stimulus Not Working Out Exactly As Recipients Had Hoped

[RINGLEADER]

Some town leaders say the federal stimulus package, with its promise of creating jobs, is neglecting to invest in the cornerstones of community life, from new city halls to recreation centers.

There's some money to hire police officers, but no money to rebuild the stations they work in. The opposite's true for firefighters. No money to hire more, but at least some funding to improve firehouses.

Money for wind turbines? Yes. New traffic signs? Yes. Hybrid car discounts? Yes.

Money for new libraries? No. New town halls? No. Swimming pools? No. School athletic stadiums? No.

While there may be some money to plunk solar panels on that aging municipal building, there's no money set aside to replace it.

"This is trickle-down stimulus," said Joseph Fernandes, town administrator in Plainville, Mass., a town of about 8,000 south of Boston. Fernandes was hoping for help building a new, $12.5 million fire, police and town hall complex, which he said could put people to work as quickly as some of the highway projects receiving stimulus dollars.

Early on, many state officials hoped the stimulus money would arrive in huge blocks with few strings. Most states pulled together what amounted to massive statewide wish lists, raising hopes for municipal makeovers.

In the end, Congress opted to funnel much of the money through existing federal channels and created a confusing hodgepodge of rules about which local projects might be eligible.
"Does it really matter if it's ... a police station or a fire station?" Fernandes said. "At the end of the day it's money that would have to be spent eventually."

Other local officials share that frustration.

When Chesterfield Township moved its library into one of Michigan's many abandoned factories in 2005, there was enough money to rehab only half of the aging structure. So when library director Marion Ashen Lusardi heard Congress was working on a stimulus package to spur construction, her eyes lit up.

"We thought this was great; maybe we can finish off the other half of the library," said Lusardi who spends her days assisting laid-off auto workers research jobs with the help of just eight Internet-connected computers.

Those dreams evaporated when Lusardi learned Congress hadn't set aside any stimulus money for projects like new libraries.

Jeffrey Simon, Director of Infrastructure Investment in Massachusetts, said he first imagined the stimulus package as a modern-day version of the New Deal-era Works Progress Administration, "where you end up with a whole series of phenomenally well-designed buildings that have lasting character."

"That's not what was in the legislation," Simon told The Associated Press. "It just plain didn't come out that way."

The frustration some municipal leaders feel must be balanced with the larger goal of putting as many people back to work as quickly as possible to help jump start the economy, according to Sen. Edward Kennedy.

"It's our hope and belief that the economic opportunity from this assistance will far outweigh the possible lost opportunities," said Kennedy, D-Mass.

Sen. Olympia Snowe, one of just three Republicans who voted in favor of the stimulus package, said some restrictions were needed to help guarantee the money is funneled to "shovel-ready," job-creating projects.

The sheer scale and complexity of the stimulus package has added to the confusion.
State officials were at first told there would be no money for the construction of new school buildings — in part because Senate moderates insisted on dropping a proposed school construction program before they would vote for the bill.

But the U.S. Department of Education has since said the law was worded in such a way that the construction of new elementary and high schools is authorized. Some stimulus money can even be spent on private schools, although religious schools aren't eligible.
Some communities are hoping they can find ways to work around the rules to help chip away indirectly at the costs of new buildings — such as tapping into stimulus dollars intended for renewable energy.

Jim Johnson, interim city administrator of Vernonia, Ore., is appealing for renewable energy stimulus money to help defray the cost of a new school building needed to replace the town's elementary, middle and high schools, damaged in a 2007 flood.

"We want to make the school one of the greenest schools in the country," said Johnson, who is hoping to use stimulus money to pay for a green roof for the school. "If you can't build the whole school, you might be able to build a green component."

In Barnstable, Mass., officials are looking for $910,000 to help equip a new community and youth center under construction with a wind and solar energy system, while officials in Ashburnham, Mass., hope for $2.3 million to build a new Department of Public Works building, one they said would feature a rooftop solar array and radiant heat floors.

And in Sanford, Maine, Town Manager Mark Green had begun to despair of seeing any stimulus money until he got word the town would receive $87,000 in energy grants. Green said it would help the town make its historic — and drafty — century-old town hall energy efficient.

"We had started doing energy conservation improvements but ran out of money," he said. "We're not looking for the federal government to do everything for us ... but we do appreciate the money we've gotten."

Mayors and town administrators may also be able to use some of the stimulus dollars to free up other money that they can then direct to projects that don't directly fall in the stimulus funding stream.

In Chesterfield Township, librarian Marion Ashen Lusardi isn't giving up hope of one day expanding her library to the other half of the factory building — or better yet, into a brand-new facility built on federal surplus land.

"People are really struggling here and as the public library we are doing everything we can," she said. "There is unfortunately a lot of empty factory space here."

http://news.yahoo.com/s/ap/20090417/ap_on_re_us/stimulus_limits

[banyon]

Why hasn't the market already built all those new town halls and police stations?

[RINGLEADER]

Why hasn't the market already built all those new town halls and police stations?

If by the market you mean the free market I would argue that they have.

Many are financed with bonds purchased by the free markets and built by free market businesses. Don't remember seeing an Uncle Sam Brick and Mortar Company.

The point of the article is that the federal government is inefficient and ill-equipped to know the needs of a local government when it comes to this sort of spending. They become governed by politics (as they should) which frequently doesn't conform with the real needs of the people they profess to serve.

[SBK]

Why hasn't the market already built all those new town halls and police stations?

Why is the federal government footing the bill?

[RINGLEADER]

Why hasn't the market already built all those new town halls and police stations?

Also, in the simplest terms, the consequences of spending without regard to the deficit or where the money is coming from will eventually lead to governments (both federal and local) to increase the return to investors on the bonds issued. That creates bigger long-term obligations. The government has to lend at a higher rate, banks lend at a higher rate, and consumers pay at a higher rate.

At least that's how it worked in the past.

[banyon]

If by the market you mean the free market I would argue that they have.

Many are financed with bonds purchased by the free markets and built by free market businesses. Don't remember seeing an Uncle Sam Brick and Mortar Company.

The point of the article is that the federal government is inefficient and ill-equipped to know the needs of a local government when it comes to this sort of spending. They become governed by politics (as they should) which frequently doesn't conform with the real needs of the people they profess to serve.


Fair enough onthe local v. federal knowledge issue. More block grants might have worked better. I would note that they are typically not "free market" bonds, they are municipal bonds, typically financed by mill levies.

[RINGLEADER]

Fair enough onthe local v. federal knowledge issue. More block grants might have worked better. I would note that they are typically not "free market" bonds, they are municipal bonds, typically financed by mill levies.

Hmm. Who knew all all these bonds I buy and sell on the open market through the bond desk at my broker were actually coming from mill levies.

ON EDIT: Your point about the grants is a good one, but it goes to my point that the federal government wants to control how the money is spent for political reasons. That's not a surprise given how most politicians conduct themselves, but it is a terribly inefficient way to grow the economy.

[Taco John]

Why hasn't the market already built all those new town halls and police stations?


Uh oh... You attacked Banyon's golden God, the Federal Government.

[banyon]

Also, in the simplest terms, the consequences of spending without regard to the deficit or where the money is coming from will eventually lead to governments (both federal and local) to increase the return to investors on the bonds issued. That creates bigger long-term obligations. The government has to lend at a higher rate, banks lend at a higher rate, and consumers pay at a higher rate.

At least that's how it worked in the past.

I think our debt is too big this time. Double digit interest rates would decimate us. I think inflation is the way out they'll try.

[banyon]

Uh oh... You attacked Banyon's golden God, the Federal Government.

Go flame war somewhere else.

[RINGLEADER]

I think our debt is too big this time. Double digit interest rates would decimate us. I think inflation is the way out they'll try.

They won't have a choice.

Any purchaser of debt can really name their return at this point.

And the only bargaining chip the US Govt has is to devalue the debt already held.

I'm sure 20% interest rates will help the housing market immensely.

[Taco John]

Go flame war somewhere else.

Why? This seems to be the place where socialists are advocating taking decisions away from locals and giving them to the feds. I don't need to go somewhere else. Besides, you guys seemed to love this stuff when I was speaking out about Bush ruining our nation. Why should it be any different when I'm speaking out against Obama running our country into the ground?

[banyon]

Why? This seems to be the place where socialists are advocating taking decisions away from locals and giving them to the feds. I don't need to go somewhere else. Besides, you guys seemed to love this stuff when I was speaking out about Bush ruining our nation. Why should it be any different when I'm speaking out against Obama running our country into the ground?

I just advocated giving decisions to locals are you blind?

[HonestChieffan]

Building stuff the community didnt need just so they can use the money and then claim success if its spent. Typical government. Results are not important, just applaud the effort. Bureaucrats are not measured why should programs be? Happy days, we can hire more government workers who can turn out more garbage stuff so we can hire more workers.

This was inevitable. The bill was rushed through with zero opportunity to have municipal and stae governments ID the priority things they need done. Instead some congressman who has no idea what was needed made up a bunch of crap that now will be forced into play or the state and locals will have to say no. But they wont do that because they love more spending so they can keep their phoney baloney jobs as Mel Brooks said.

[jAZ]

...golden God...

Funny...

http://www.chiefsplanet.com/BB/customavatars/avatar1101_24.gif

[Calcountry]

They won't have a choice.

Any purchaser of debt can really name their return at this point.

And the only bargaining chip the US Govt has is to devalue the debt already held.

I'm sure 20% interest rates will help the housing market immensely.That would also help all the senior citizens and the value of their Soc sec checks, lmao.

Oh, btw, they vote.

[Calcountry]

Why? This seems to be the place where socialists are advocating taking decisions away from locals and giving them to the feds. I don't need to go somewhere else. Besides, you guys seemed to love this stuff when I was speaking out about Bush ruining our nation. Why should it be any different when I'm speaking out against Obama running our country into the ground?:clap::clap:

Because, they are gamers. They game their side over the interests of the country and its long term prosperity.

Had I known, that Bush wasn't going to ever veto a single spending bill, I never would have voted for him. But alas, you cannot go back in History, and I doubt that Al Gore, or John Kerry would have done any different if not spent us into the hole that BHO is trying desperately to get us into yesterday. He has 8 years of catching up to do don't you know?

[KC native]

They won't have a choice.

Any purchaser of debt can really name their return at this point.

And the only bargaining chip the US Govt has is to devalue the debt already held.

I'm sure 20% interest rates will help the housing market immensely.

WTF are you talking about? Name their price? What bond market are you talking about? Treasuries that just went on auction were yielding .01%. I would hardly call that naming your price since you're effectively paying the government to hold your money.

[banyon]

:clap::clap:

Because, they are gamers. They game their side over the interests of the country and its long term prosperity.

Had I known, that Bush wasn't going to ever veto a single spending bill, I never would have voted for him. But alas, you cannot go back in History, and I doubt that Al Gore, or John Kerry would have done any different if not spent us into the hole that BHO is trying desperately to get us into yesterday. He has 8 years of catching up to do don't you know?

WTF are you talking about you crack smoker? I OPPOSED both the bank bailout and the stimulus bill as wasteful and ill-considered. Turn off your partisan blinders for a moment.

[patteeu]

Why can't the additional policemen hang out at the new firehouse? Problem solved. Next!

[Velvet_Jones]

:clap::clap:

Because, they are gamers. They game their side over the interests of the country and its long term prosperity.

Had I known, that Bush wasn't going to ever veto a single spending bill, I never would have voted for him. But alas, you cannot go back in History, and I doubt that Al Gore, or John Kerry would have done any different if not spent us into the hole that BHO is trying desperately to get us into yesterday. He has 8 years of catching up to do don't you know?

But why were the bills presented to the president for signing then? Those people who wrote the bills need to account for that. It is not the Presidents job to control Congress. When are the members of congress going to take responsibility for their actions?

[RINGLEADER]

WTF are you talking about? Name their price? What bond market are you talking about? Treasuries that just went on auction were yielding .01%. I would hardly call that naming your price since you're effectively paying the government to hold your money.

Was speaking to the earlier poster's (I think correct) assumption that inflation is the only ending of this story. I was able to get a five-point premium on 2.0% bonds that matured six months out because people were looking for safety. When inflation begins to rear its ugly head these will look like the salad days.

Again, if history is any indicator.

[RINGLEADER]

WTF are you talking about you crack smoker? I OPPOSED both the bank bailout and the stimulus bill as wasteful and ill-considered. Turn off your partisan blinders for a moment.

Bank bailout was necessary (though with a little refining I'm sure we could have gotten institutions to gladly accept 50-75 cents on the dollar rather than paying full boat on insured instruments that shouldn't have ever existed). Stimulus bill as signed is wasteful and ill-considered. IMHO of course.

[RINGLEADER]

But why were the bills presented to the president for signing then? Those people who wrote the bills need to account for that. It is not the Presidents job to control Congress. When are the members of congress going to take responsibility for their actions?

Never.

When something happens that puts a face on the mess that average people understand the Congress just points the finger at Obama and the White House returns the favor. Pass a new law that makes everyone feel good (even if it never gets signed) and wait for an airplane crash or pirate attack to change the story.

Rinse and repeat.

[KC native]

Was speaking to the earlier poster's (I think correct) assumption that inflation is the only ending of this story. I was able to get a five-point premium on 2.0% bonds that matured six months out because people were looking for safety. When inflation begins to rear its ugly head these will look like the salad days.

Again, if history is any indicator.

You mean a discount? What you're saying makes no sense. 6 months out would make it corporate paper and those rates are no where near 2% (edit: just found some close and they are CD's from Financials. GMAC and some other banks. These aren't very safe and unless you have a high risk tolerance you shouldn't have been sold those). Here are the treasury rates and spreads have been narrowing so I'm interested in what they sold you.

http://www.federalreserve.gov/releases/cp/

Discount rates
1Term AA
2nonfinancial A2/P2
3nonfinancial AA
4 financial AA
asset-backed
1 2 3 4
1-day 0.13 0.61 0.14 0.46
7-day 0.07 0.54 0.30 0.79
15-day 0.15 0.75 0.25 0.34
30-day 0.22 1.01 0.30 0.66
60-day 0.22 n.a. 0.32 0.71
90-day 0.20 n.a. 0.49 0.79

Daily Treasury Yield Curve here

April 2009
Date 1 mo 3 mo 6 mo 1 yr 2 yr 3 yr 5 yr 7 yr 10 yr 20 yr 30 yr
04/01/09 0.18 0.22 0.41 0.58 0.83 1.16 1.65 2.25 2.68 3.54 3.51
04/02/09 0.17 0.22 0.41 0.59 0.88 1.25 1.74 2.35 2.77 3.63 3.57
04/03/09 0.16 0.21 0.42 0.60 0.96 1.36 1.87 2.51 2.91 3.77 3.70
04/06/09 0.16 0.20 0.40 0.60 0.94 1.37 1.90 2.55 2.95 3.82 3.73
04/07/09 0.17 0.20 0.39 0.60 0.91 1.33 1.87 2.51 2.93 3.79 3.72
04/08/09 0.15 0.18 0.39 0.59 0.93 1.34 1.83 2.43 2.86 3.74 3.66
04/09/09 0.13 0.18 0.39 0.60 0.96 1.36 1.90 2.49 2.96 3.85 3.76
04/13/09 0.12 0.18 0.37 0.57 0.89 1.27 1.81 2.39 2.88 3.78 3.69
04/14/09 0.09 0.17 0.35 0.54 0.86 1.21 1.71 2.31 2.80 3.73 3.64
04/15/09 0.07 0.15 0.34 0.54 0.86 1.22 1.71 2.29 2.82 3.75 3.66
04/16/09 0.02 0.13 0.33 0.54 0.91 1.27 1.79 2.36 2.86 3.81 3.72
04/17/09 0.04 0.14 0.36 0.57 0.99 1.36 1.91 2.48 2.98 3.91 3.79

http://www.federalreserve.gov/releases/cp/yieldcurve.gif

[RINGLEADER]

You mean a discount? What you're saying makes no sense. 6 months out would make it corporate paper and those rates are no where near 2% (edit: just found some close and they are CD's from Financials. GMAC and some other banks. These aren't very safe and unless you have a high risk tolerance you shouldn't have been sold those). Here are the treasury rates and spreads have been narrowing so I'm interested in what they sold you.

http://www.federalreserve.gov/releases/cp/

Discount rates
1Term AA
2nonfinancial A2/P2
3nonfinancial AA
4 financial AA
asset-backed
1 2 3 4
1-day 0.13 0.61 0.14 0.46
7-day 0.07 0.54 0.30 0.79
15-day 0.15 0.75 0.25 0.34
30-day 0.22 1.01 0.30 0.66
60-day 0.22 n.a. 0.32 0.71
90-day 0.20 n.a. 0.49 0.79

Daily Treasury Yield Curve here

April 2009
Date 1 mo 3 mo 6 mo 1 yr 2 yr 3 yr 5 yr 7 yr 10 yr 20 yr 30 yr
04/01/09 0.18 0.22 0.41 0.58 0.83 1.16 1.65 2.25 2.68 3.54 3.51
04/02/09 0.17 0.22 0.41 0.59 0.88 1.25 1.74 2.35 2.77 3.63 3.57
04/03/09 0.16 0.21 0.42 0.60 0.96 1.36 1.87 2.51 2.91 3.77 3.70
04/06/09 0.16 0.20 0.40 0.60 0.94 1.37 1.90 2.55 2.95 3.82 3.73
04/07/09 0.17 0.20 0.39 0.60 0.91 1.33 1.87 2.51 2.93 3.79 3.72
04/08/09 0.15 0.18 0.39 0.59 0.93 1.34 1.83 2.43 2.86 3.74 3.66
04/09/09 0.13 0.18 0.39 0.60 0.96 1.36 1.90 2.49 2.96 3.85 3.76
04/13/09 0.12 0.18 0.37 0.57 0.89 1.27 1.81 2.39 2.88 3.78 3.69
04/14/09 0.09 0.17 0.35 0.54 0.86 1.21 1.71 2.31 2.80 3.73 3.64
04/15/09 0.07 0.15 0.34 0.54 0.86 1.22 1.71 2.29 2.82 3.75 3.66
04/16/09 0.02 0.13 0.33 0.54 0.91 1.27 1.79 2.36 2.86 3.81 3.72
04/17/09 0.04 0.14 0.36 0.57 0.99 1.36 1.91 2.48 2.98 3.91 3.79

http://www.federalreserve.gov/releases/cp/yieldcurve.gif


Nice numbers, but I'm talking about bonds that were purchased years ago and, as I mentioned, were coming due. The spread between the value of currently available munis and what the market would pay for those in question netted a premium.

Not sure what this has to do with the free market financing local projects or what treasuries will yield in the future if inflation takes hold, but thanks for the pretty numbers.

[BucEyedPea]

Never.

[B]When something happens that puts a face on the mess that average people ]understand [/Bthe Congress just points the finger at Obama and the White House returns the favor. Pass a new law that makes everyone feel good (even if it never gets signed) and wait for an airplane crash or pirate attack to change the story.

Rinse and repeat.

But, but...that's anecdotal evidence. That doesn't count to the other side.

[KC native]

Nice numbers, but I'm talking about bonds that were purchased years ago and, as I mentioned, were coming due. The spread between the value of currently available munis and what the market would pay for those in question netted a premium.

Not sure what this has to do with the free market financing local projects or what treasuries will yield in the future if inflation takes hold, but thanks for the pretty numbers.

Like I said I was curious. We have to keep track of rates and what's going on in fixed income land to know what's going on with our bond funds. You weren't clear earlier so I was trying to figure it out. It's very well possible that they found you that rate but I'm still curious as to what the specific issue was because that's outside of what's going on for the most part. You can PM me if you want with the issue. I hope you have a higher than standard risk tolerance though because it sounds like they found something that may not be paid off when it matures (whether it's a high or low probability is a different story. There is a lot of fear out there still in fixed income).

[KC native]

But, but...that's anecdotal evidence. That doesn't count to the other side.

Except that it's not. You really don't get the anecdotal vs quantified relationship. If you had an inkling of understanding wrt financial markets you would realize that it's entirely possible.

[BucEyedPea]

Did you say something?

[RINGLEADER]

Like I said I was curious. We have to keep track of rates and what's going on in fixed income land to know what's going on with our bond funds. You weren't clear earlier so I was trying to figure it out. It's very well possible that they found you that rate but I'm still curious as to what the specific issue was because that's outside of what's going on for the most part. You can PM me if you want with the issue. I hope you have a higher than standard risk tolerance though because it sounds like they found something that may not be paid off when it matures (whether it's a high or low probability is a different story. There is a lot of fear out there still in fixed income).

Not sure how risk tolerant that makes me, but if the kinds of bonds I own were to suffer in the ways you laid out above it pretty much wouldn't matter what treasuries or anything else was paying because the entire financial system would have to collapse pretty completely. I did take some defensive measures against owning much in California (despite the tax savings) because the politicians in this state are just stupid enough to sink everything.

Sorry if I wasn't clear earlier.