N.C. economy won't be fixed by stimulus

McClatchy NewspapersFebruary 12, 2009 

WASHINGTON — The economic stimulus deal agreed to late Wednesday could amount to more than 100,000 jobs saved or created in North Carolina, money for transportation projects as disparate as new roads around Fort Bragg and new buses in Durham, and modest tax credits to families buying new houses.

Still, Gov. Beverly Perdue's office said the package will not take care of the state's $2 billion shortfall, and U.S. Sen. Richard Burr doesn't think it offers enough tax credits to help individuals.

Details on the deal remained sketchy Wednesday, but some economists were uncertain whether it can turn the economy around.

"What we hope it will do is make the losses somewhat smaller," said Mike Walden, an economist at N.C. State University.

Walden warned that North Carolina will continue to lose jobs. And its unemployment rate, now at 8.7 percent, likely will hit 10 percent this year and climb still higher next year, he said.

The recession, Walden said, "is much deeper than what this could cure."

President Barack Obama said Wednesday that the package will give states "significant relief." Specifically, he said it would lower states' burden by extending unemployment benefits, allowing more people to receive unemployment benefits and helping laid-off workers keep their employer health insurance.

But Obama, speaking at a White House session with reporters from The News & Observer and 15 other regional papers, warned that states seeing the toughest problems won't recover from the recession "overnight."

"There's going to be some more work that needs to be done," he said.

Gene Conti, North Carolina's transportation secretary, traveled to Washington on Wednesday to meet with federal leaders. Conti said he still hopes North Carolina will receive about $900 million in infrastructure dollars in the compromise deal.

Conti said he told U.S. Transportation Secretary Ray LaHood that as soon as money comes in the door, North Carolina can get it back out to contractors who are desperate for jobs.

"Everybody is extremely optimistic that they're finally going to see some work," Conti said. "Everybody is ready to go as soon as money is available."

Conti's office has a to-do list that is packed with road projects that have been proposed by state engineers and local municipalities. Many of them were ready to go but stalled for lack of money.

Local school districts may also be in position to start building. The compromise package fully restores $25 billion for a proposal by U.S. Rep. Bob Etheridge, a Lillington Democrat, to allow districts to use zero-interest bonds to fund school construction projects.

Burr, a Winston-Salem Republican, had voted for an alternative Republican bill that focused more on tax cuts, tax credits and housing incentives. He said Wednesday that he will oppose the compromise.

Among his complaints: $35 billion that has been set aside for homebuyers' housing credits appeared to have been slashed to about $2 billion.

That meant families buying new homes would receive about $1,000 or $2,000 instead of the $15,000 credit that Burr had supported.

"If the theory behind stimulating the economy is you got to go in big, you make a splash, don't stick a toe in, how can they take a component like housing and cut it from $15,000 to $2,000?" Burr asked.

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