Oct. 5--TRIAD -- Trying to calculate the impact of the federal stimulus on the national, state and local economic landscape means playing a frustrating game of "what if."

What if the American Recovery and Reinvestment Act hadn't been passed by the Democratic-controlled Congress and signed by President Barack Obama as the economy teetered on the brink of calamity at the first of the year?

What if the president and Democrats and Republicans in Congress had taken another approach, such as more emphasis on tax cuts and less on federal spending, though a general tax cut of $116 billion was part of the stimulus? And what if the federal government had done nothing, leaving private enterprise to its own devices to sort out the recession?

Local economist Mike McCully said all the unknowns and suppositions surrounding the stimulus add to the difficulty of assessing its impact.

"It's very complex to try to estimate how many jobs will be created by a government spending package because we don't know for sure what would have happened to the economy without the package. Did we avoid a disaster? Or would it have done better by itself through a private sector recovery? It's inherently very difficult, and that's why there's a lot of disagreement," said McCully, associate professor of economics at High Point University.

Another complication is that only about one-third of the stimulus has been spent so far, meaning it's difficult to undertake a comprehensive analysis of the impact, McCully said.

The politics surrounding the stimulus add to the dispute. For example, the White House estimates that the stimulus plan will create or save 105,000 jobs in North Carolina, according to the NCRecovery.gov Web site coordinated through Democratic Gov. Beverly Perdue's office.

In a statement on the Web site, Perdue says: "While the funds won't solve all of the challenges facing North Carolina and the nation, they are critical to getting North Carolina back on track. The funds will help rebuild our infrastructure, grow our economy, stabilize our budget and get North Carolinians back to work."

But a report released by the conservative-leaning Civitas Institute contends that the stimulus will cost jobs in North Carolina.

"Federal government spending comes with costs; it should not be accepted as the free-lunch it is frequently considered to be," according to the report prepared by Arduin, Laffer and Moore Econometrics.

The Civitas Institute report contends that federal money crowds out productive private sector spending while increasing debt loads in the public sector. The impact of the stimulus will reduce overall jobs in North Carolina by between 51,100 and 66,900, concludes Arduin, Laffer and Moore Econometrics.

pjohnson@hpe.com -- 888-3528

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