Yesterday The New York Times had a great story about how France has been able to pour more money (relatively speaking) into stimulus projects than the U.S. According to Nelson D. Schwartz’s piece, "France, unlike U.S., is deep into stimulus projects," 75 percent of France’s $37 billion stimulus plan will be spent by the end of the year on a variety of projects, ranging from restoring chateaus to fixing roads. By contrast, it will take the U.S. until Fall 2010 to spend 75 percent of its stimulus funds ($787 billion).
Check out this little tidbit from the article:
"'America is six months behind; it has wasted a lot of time,' said Patrick Devedjian, the minister in charge of the French relance, or stimulus. By the time Washington gets around to doling out most of its money, Mr. Devedjian sniffed, 'the crisis could be over.' … As it turns out, France’s more centralized, state-directed economy — so often criticized in good times for smothering entrepreneurship and holding back growth — is proving remarkably effective at deploying funds quickly and efficiently in bad times."
Yikes. You’d think we’d be better at spending this money, though I suppose there’s something to be said for taking a measured approach to allocating that kind of cash. After all, $787 billion is a heck of a lot more coin than $37 billion… which brings me to another point.
You might have seen that one of President Obama’s economic advisors suggested that we need another round stimulus spending because the last one wasn’t enough. Reuters reported that Laura D'Andrea Tyson, who is a member of Obama’s economic crisis committee, said just that at a seminar in Singapore today.
So why does it make sense to pony up more stimulus cash if it’s going to take us years to spend the first round? Is it all about confidence building as opposed to the actual stimulative effect of the money? In other words, to what extent is the stimulus about confidence building measures for the economy versus actually injecting money into the system?
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