While politicians spent the first anniversary of the stimulus bill debating its merits, I spent the day traipsing around Brooklyn to figure out how the federal dollars flowed through my neighborhood: from the residential streets of Carroll Gardens to the downtown office buildings to the border of the Gowanus Canal.
Back in Washington, Democrats and Republicans argued about the effectiveness of the American Recovery and Reinvestment Act. The White House sent officials into 35 different communities to tout what it saw as the bill's main benefits: job creation, tax cuts, extension of unemployment insurance, aid to local governments, and infrastructure projects. Republicans questioned the number of jobs the bill created, and most economists said that the stimulus bill staved off a massive economic collapse. While the national debate continues, my neighborhood stimulus tour showed that small businesses are still struggling; stimulus money largely went to established institutions and agencies for short-term gains; and few people, even those who benefited from the money, really understand how the stimulus has worked.
That's true for Peter Byrnes, the owner of Lúgh Studio Inc.—a graphic-design firm that is sandwiched between a coffee shop and my favorite spot for takeout tacos. In March 2009, Byrnes's seven-person firm received a stimulus-backed loan of $150,000 that enabled him to pay an outstanding American Express bill and payroll taxes, and provided a much-needed cash cushion. But it did not help him hire new workers, restore his company's health insurance, or reinstate the employees' 20 percent pay cut. In fact, since he received the loan, he has laid off three workers. "Oh, my gosh, it wasn't a stimulus," he says. "It was a stopgap."
With the help of Recovery.gov, I turned up five businesses—large and small—that have received about $1 million in the last year, along with nonprofits, real-estate companies, city agencies, and universities that received another $11.3 million. Among them: the Polytechnic Institute of New York University, which garnered $4.2 million in grants and subcontracts to study protein engineering, renewable energy, and cybersecurity. The New York City Fire Department got $2.7 million to buy equipment to better patrol Brooklyn's ports. A real-estate owner named Jacob Frankel, with offices at 32 Court Street, received roughly $750,000 to maintain and repair low-income housing units, according to the federal government's Web site, and another real-estate company named Greenwich Street Equities took out a $1.5 million government-backed loan to build a boutique hotel in an up-and-coming industrial neighborhood.
Most of the resulting jobs appear to be temporary. The $1.5 million loan for the boutique hotel will employ 50 to 60 subcontractors and construction workers until the property is completed, says real-estate developer Alec Shtromandel. The Polytechnic Institute is using pockets of the money to temporarily hire Ph.D. students and postdoctoral fellows to do the extra research, says Kurt Becker, associate provost of research and technology initiatives, but these will not become administrative jobs. The North Brooklyn Business Outreach Center in Ft. Greene is using its grant of $600,000 to hand out microloans to very small business owners: from livery cabdrivers to child-care providers to fashion designers looking to expand their businesses.
Byrnes says his chief complaint is that the stimulus package did not give small business owners like him more access to credit. Lúgh Studio has seen its credit slashed in the past year from roughly $106,000 to $14,000, with a 22 percent interest rate. "I have printing bills higher than $14,000," Byrnes says. "It's outrageous that the banks received enormous bailouts, and now that they are showing a profit, they are charging higher fees on credit cards for people like myself."
A policy fellow at the Brookings Institution levels another criticism at the stimulus projects in cities: namely that the federal government did not apply the money to innovative or new programs. Rather than use the leverage of $787 billion to rethink and reshape the economy, the government funneled the money through well-established agencies, says Mark Muro, policy director of the Metropolitan Policy Program at the Brookings Institution. In my Brooklyn neighborhood, the most "innovative" money went to the Polytechnic Institute to do research on renewable energy. Other big pots went to city agencies such as the N.Y.F.D.; social programs such as Brooklyn Child and Family Services; and federal government agencies such as the Department of Housing and Urban Development and the Small Business Administration. "It's a lot of business as usual," Muro says. "A lot of the money was channeled through separate silo programs. The ultimate impact was that money was distributed across lots of small-bore items."
Funding small-scale projects like hotel construction and equipment purchases for fire departments may also leave people unaware of the stimulus's footprint. Lúgh Studio workers did not know that the $150,000 loan they suddenly received in March came from the stimulus. It took the New York office of the Department of Housing and Urban Development three days to track down the addresses of the low-income apartments supported by the $750,000 grants. Block-to-block in Brooklyn, residents do not understand the ways in which the stimulus has burrowed down into the fabric of its smaller neighborhoods. What people do understand is the project's enormous price tag.
This is not to say that stimulus has not worked. The package was meant to quickly give the economy a jolt and prevent another Great Depression. Independent economists from the Congressional Budget Office to Moody's agree that it accomplished these tasks, in addition to already adding 1.6 million to 1.8 million jobs to the economy. For Brooklyn business owners such as real-estate developer Shtromandel, the stimulus gave him leeway to do a project that otherwise would not have been possible. "We would not have purchased the land. It just would not have materialized," he says.
NEWSWEEK's Daniel Gross points out that it's too early to write the stimulus's postmortem. Another $515 billion in tax cuts, contracts, loans, and money for entitlement programs still needs to work its way through towns, cities, and neighborhoods over the next two years. But my own little neighborhood stimulus tour shows that so far the average person has little idea how it's working. That can't be good news for defenders of the package.