Stimulus impact debated in SC

WASHINGTON — Jim Ewart is a Vietnam War veteran who calls John McCain "a great American" and gave the Arizona senator's presidential campaign $500.

Ewart, though, is glad Barack Obama won the election.

"It needed to be a Democrat," Ewart said. "I've got a ton of respect for McCain, but I knew that some money had to be spent to save our industry, and for that matter maybe to save the whole damn country."

Ewart's Columbia-based highway construction company recently lost out -- to a Lexington, Ky., firm -- on its bid to build a $26 million bridge over Little Pee Dee River on the border of Horry and Marion counties, the biggest in the first wave of South Carolina road projects funded by economic-stimulus money.

That's fine with Ewart, too -- his company, U.S. Constructors, will bid on future stimulus projects.

In its landmark June 4 decision, the S.C. Supreme Court ended Gov. Mark Sanford's months-long effort to reject $700 million in stimulus funds.

The state high court ruled that the General Assembly has the power to budget the money for public education, law enforcement and other intended uses.

But four months after President Obama signed the American Reinvestment and Recovery Act into law, the debate over whether it's creating jobs and jolting the economy back to life is a topic of intense debate -- and nowhere more than in South Carolina.

With its 11.5 percent unemployment rate, historically underperforming public schools and entrenched pockets of poverty, South Carolina will be a national laboratory for showing whether Obama delivers on one of his signature initiatives.

The Obama administration required each state to appoint a "stimulus czar" as its point person -- to track the money coming from dozens of federal agencies and to stay in regular touch with White House aides dedicated to the recovery program.

So far, South Carolina's stimulus czar is unimpressed.

Sanford appointed Richard Eckstrom, the state's top accountant as comptroller general, to the post.

Eckstrom has been to Washington twice and participated in numerous "webinars" and conference calls with other state officials.

"The jobs that were promised haven't come yet," Eckstrom said Friday in an interview. "The (stimulus) act seems to focus more on stimulating government growth than on stimulating economic growth."

That may be about to change in South Carolina.

Some 500 public school teachers across the state who'd faced the loss of their jobs will be back in the classroom next fall, thanks to some of the disputed stimulus funds freed up by the high court's decision.

Paving companies, highway-construction firms and other contractors are gearing up for a summer mini-boom financed in part by $129 million in contracts awarded with stimulus money by the S.C. Transportation Department.

Officials at the Savannah River Site in Aiken County are using the first installment of the nuclear-weapons complex's $1.6 billion stimulus payout -- the nation's second-largest recovery total for a single entity -- to hire hundreds of carpenters, welders and other workers.

The Columbia Housing Authority has started drawing on the $5.2 million in recovery money it's been authorized to receive for capital improvements.

That's more than 2 1/2 times the annual amount the local agency normally gets to upgrade its 2,000-plus public-housing units.

"It's definitely going to help," said Gilbert Walker, the agency's executive director. "When the money comes in, we hire contractors. They have to buy supplies from Lowe's or Home Depot. The paint stores that normally wouldn't be selling paint are now doing business. The subcontractors that may have been slow will pick up. It's just a rolling effect."

Walker is using the extra money to renovate 100 units at Latimer Manor in North Columbia. He's requiring contractors to hire and train public-housing residents -- eight or 10 to start, more later if it proves successful.

"It's experimental," Walker said. "Hopefully, they will pick up a trade and learn something so that when this work is completed, they will be able to go on and hold employment someplace else."

The $26 million project to build the Little Pee Dee River bridge -- plus six smaller bridges over tributaries and floodplains -- shows how hard it will be to track the stimulus spending and weigh its impact in each state.

The state highway department received seven bids for the project, an unusually high number that indicates how bad the economy's been and how much building contractors have been hurting.

The job went to R. R. Dawson Bridge Co. in Lexington, so a sizable piece of change slated for South Carolina on paper will end up in Kentucky.

At the same time, Dawson will hire South Carolina subcontractors who, in turn, will employ local men and women to cut pipe, crush stone, clear bush, haul debris and perform dozens of other essential tasks tied to the bridge project.

Already, Dawson has notified Gibson Construction Co. in Aynor, northwest of Conway in Horry County, that it will be the main subcontractor responsible for all land-clearing work.

Michael Gibson, the company's owner, said the job will be worth $4 million to his 45-employee firm.

In April 2008, Gibson Construction Co. laid off nine workers -- the first time it had ever let people go.

Now, thanks to the bridge contract, Gibson plans to hire at least 10 workers, including possibly some of the laid-off ones who haven't moved or found other jobs.

That and other stimulus-funded projects Gibson hopes to land will help things level off from the economic freefall of the last year or two.

"It's going to relieve a burden," he said. "We have to spend every dime we get our hands on. We put the money right back into the economy. The taxpayers are receiving something for their money and getting a bang for their buck."

In Aiken, SRS officials have hired 400 people with stimulus money to demolish 100 buildings contaminated in the Cold War nuclear arms race and to deactivate two of its five reactors, none of which are operating.

The hiring pace is so fast that SRS has engaged 13 regional employment agencies.

Jim Giusti, a U.S. Energy Department spokesman who's worked on site at SRS for almost 17 years, said most of the new hires live in Aiken, Allendale and Barnwell counties, with the rest coming from the Augusta area across border in Georgia.

"It is having an impact," Giusti said. "At the same time we're putting people to work and stimulating the economy, we're accomplishing the important work of cleaning up the environment at Savannah River Site."

All told, the $1.6 billion in stimulus money that SRS will receive through September 2011 should enable the complex to "either create or retain" 3,000 jobs, Giusti said.

Sanford's rejection of $700 million in recovery funds -- including two letters to Obama, asking if he could use it to pay down state debt -- made him one of the nation's leading stimulus foes.

Three months after Obama's budget chief dismissed Sanford's appeals, the governor remains a hard-edged skeptic.

"If you throw enough money at anything, you can have some kind of impact," Sanford said in an interview. "Over the short run, it will have a stimulative effect. The question is -- will that be lasting and sustainable? The answer is absolutely no because we go off a financial cliff in about 24 months -- to the tune of about a billion dollars — when these (stimulus) monies run out."

In Washington, Obama aides marvel that Republican lawmakers who'd demanded that the stimulus package contain significant tax cuts now ignore the hundreds of millions of dollars it's allowing Americans to keep from the IRS.

South Carolina business owners and wage earners have more cash -- an estimated $314 million by year's end -- thanks to the recovery bill's cut in payroll taxes, its $500 tax credit and other tax reductions.

Social Security recipients, disabled veterans and retired railway workers, meanwhile, have received a one-time $250 payment.

Bill Hauk, a business professor at the University of South Carolina in Columbia, said many taxpayers appear to be using the extra money to pay off debt or put into savings.

"Policy-makers would like people to buy goods and services and get the economy flowing again," Hauk said. "But in an economic downturn, a private virtue (like saving or paying debt) can be a public vice."

Hauk advised folks in Washington to keep a close eye on South Carolina to determine the ultimate success of the recovery plan.

"My hunch is that if the stimulus doesn't work in South Carolina, it probably won't work nationally," he said.

Stimulus dollars

Differing terminology -- allocated vs. authorized vs. released and the like -- and staggered timetables make it impossible to know how much stimulus money South Carolina and its residents have received to date.

Interviews with federal, state and local officials, plus research on a half-dozen Web sites trying to track stimulus spending, suggest that by mid-autumn, about $1.3 billion will have reached the state, or be on its way:

Individual tax cuts/rebates .................. $314 million

Medicaid copayment cuts ..................251 million

Savannah River Site cleanup ..................182 million

Social Security/disabled vets ..................127 million

Public school districts .................. 64 million

Increased unemployment benefits .................. 63 million

Highways/bridges/resurfacing ................ 53 million

Increased food stamps .................. 44 million

Pell grants/college aid .................. 26 million

Special education/disabled students .................. 21 million

Other .................................... 181 million

For more data: