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Opinion

Commentary: When stimulus funds are gone, what then?

Jackie Bueno Sousa - The Miami Herald

October 04, 2010 03:49 AM

The billions in federal stimulus money that have been pumped into Florida offer some people a measure of comfort.

There's the $10 million for a new sewage system in Doral, the $59,000 grant for an FIU professor to study an aspect of legal history in colonial Peru and Mexico, $4 to help a Miami resident pay for transportation as part of a job-rehabilitation grant.

As reported this week by Miami Herald staff writer Doug Hanks, the state has received some $9 billion so far, with more to come in the next couple of years.

So governments and organizations throughout Florida, as if grasping a lifeline, are reaching for the money and breathing a sigh of relief.

Rather than make me feel at ease, it leaves me holding my breath, waiting, waiting for reality to set in.

It's the same uneasy feeling I had in the 1990s, when everyone was giddy with the money being generated by over-valued technology stocks. It's the same uneasy feeling I had during much of the past decade, when people somehow believed they could afford houses that cost four, five, six times their annual incomes.

Today, federal government money is the new false hope that's artificially inflating the economy -- however insufficiently -- and leaving hundreds of governments and organizations in Florida believing they have more money than they actually have. In the process, it allows them to put off making difficult decisions.

I'm talking about the kinds of decisions, for example, that might have required school boards to initiate mass teacher layoffs if not for a $500 million boost. What will those school boards do when the federal money stops rolling in?

Eventually, reality always sets in. At best, the bubble deflates slowly. At worst, it bursts with such force that it leaves most of us spinning and banged up.

That's not to say there isn't a perfectly good argument for the stimulus. If the economy organically re-energizes before the money runs out, restoring plump taxes and other revenues to governments and other agencies, then it will have done its job of alleviating the pain during a down cycle. It's not unlike what many of our friends and neighbors are doing today as they dig into savings to offset lost income, while waiting for the jobs to return.

Except the federal government isn't reaching into savings; it's borrowing the money, further increasing the risk if in the next couple of years the economy doesn't regain its past strength.

Without some kind of transformational change -- the advent of a new industry, explosive growth in exporting -- there's little chance local and regional tax revenues will soon again be what they were in years past.

That means the best long-term use of the stimulus money would be in helping to bring about that much needed transformational change.

There are some glimpses of such an effort in Florida, such as the $200 million in stimulus money Florida Power & Light received to install "smart" electric meters that allow homeowners to monitor their power use -- an innovation with the potential to change consumer behavior.

Such examples are few, however.

For the most part, we're borrowing billions of dollars to help support the status quo.

That the status quo may not be sustainable, well, that's easy to ignore for now. We still have that steady drip-drip-drip of federal money filling the bubble.

And then it stops. POP!

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