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Q & A With Michael Leachman on the Recovery Act


Today, we sat down with Michael Leachman, a Senior Policy Analyst at the Center, to discuss the latest information showing that the Recovery Act is creating jobs and boosting the economy.

Michael, the Congressional Budget Office, or CBO, issues a new report every quarter about the impact of the Recovery Act on jobs. What does the most recent report show?

Well, the new report estimates that there were between 1.2 million and 2.8 million more jobs in the economy in March than there would have been without the Recovery Act.

What do the projections tell us about how the Recovery Act is expected to work in the future?

The report shows that the Recovery Act’s impact on jobs will actually peak this fall, when there will be up to 3.7 million more jobs because of the legislation.

States are facing record budget deficits.  I understand that the Recovery Act provides an important measure to address this problem and to prevent states from taking actions to close their budget shortfalls that would hurt the economy and cost jobs.  Can you tell us about this?

One of the most effective provisions is federal aid to states to prevent deep cuts to education, health care and other services.  When states have to make these kinds of cuts, they lay off teachers and police officers, they cancel contracts with vendors.  And this causes a ripple effect: the laid off teacher spends less money at the grocery store, the vendor may have to lay off more workers.

Provisions that put money directly into the pockets of people who need it are really also very effective.  For example, someone who has lost his or her job spends additional weeks of unemployment benefits quickly and close to home, and that gives the local economy a needed boost.

Given that lots of experts think the economy is starting to recover, are these kinds of provisions still needed?

Absolutely.  Despite some promising economic signs, unemployment is still high and state budgets are still in a lot of trouble.

The good news is that the House just voted to extend unemployment benefits and the Senate is expected to follow suit very soon.

And the bad news?

The bad news  -- and it’s really very troubling news – is that the aid to states is set to run out before states recover and it’s looking less likely that Congress will pass the additional help that states desperately need.

Congress had indicated previously that they would extend the aid.  So, it’s quite understandable that most state budgets for the next year assume it will be available.  But now Congress might pull the rug out from under states by failing to approve that help.

And that would mean even deeper cuts and a significant drag on the economy.

So, what’s the bottom line?

We’re not out of the woods yet and Congress really needs to extend this critical assistance to states.

Learn more about the Recovery Act's effect on jobs here.  You can also download a podcast of this conversation on iTunes.