The House has passed the White House’s request for an extension of the Build America Bond program ’till 2012, and the Senate is getting there.

Just what state, local, and the federal government need: more “cheap” debt, thanks to an implicit federal government guarantee. The program repeats Europe’s mistake in allowing fiscally profligate states to borrow cheaply under a continental umbrella — but it’s worse than that. (more…)

As part of the White House’s $3.8 trillion 2011 budget, President Obama has proposed making the “Build America Bonds” program permanent. Build America Bonds have offered states and localities a quick fix since Washington created them in the stimulus package last year. But access to the bonds discourages municipalities from addressing their budget problems head-on, so that they can cut borrowing, not add to it.

Under the program, states can issue taxable bonds, with the federal government subsidizing the extra cost. The new proposal would cut the feds’ subsidy to states and localities from enough to cover a 35 percent tax rate to enough to cover a 28 percent tax rate. (more…)

It’s increasingly clear that the federal government’s “Build America Bonds” program, part of the stimulus, was a backdoor bailout for California. Under the program, states can issue taxable bonds, with the federal government reimbursing them for the higher interest rate required on such bonds, relative to tax-exempt debt. (more…)

Generations of young (mostly male) Americans have schooled themselves in basic auto mechanics, saving thousands of dollars in the bargain, by teasing years of service out of high-mileage cars given up for dead by their previous owners.  For that guy out there (and you know who you are) who has worked himself through college, graduate school and into doctoral studies while squeezing an extra 100,000 miles out of a 1998 Saturn, it may be a little sickening to read this Daily News article describing the termination of old cars exchanged for new ones under the Cash for Clunkers program.

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Governor Paterson’s plan to give $200-per-child “back to school” bonus payments to welfare and Food Stamp recipients exemplifies the federal stimulus bill at its worst.  It’s basically a helicopter drop of cash justified on the grounds that, after all, these folks need the money and will spend it–which, when you come right down to it, is justification enough for just about anything.

Violating the much-touted “transparency” of the stimulus program, the plan also was conceived in secret.   The governor’s staff bypassed the Legislature (based, perhaps, on this budgetary language) and did not seek alternatives from welfare administrators in New York City and county governments around the state.

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The question is posed by a story in today’s Syracuse Post Standard that deserves national attention. Money graf:

The National Institutes of Health, the country’s top research agency, is awarding recovery money to projects proposed long before the recession. With $8 billion extra dollars to spend on research, agency officials went back to the list of projects that had been turned down.

They looked for projects that could be done in two years, with no special emphasis on job creation and no requirement that the scientists buy equipment made in America.

Scientists whose ideas did not make the cut last year are answering surprise telephone calls from government officials, announcing the projects would be funded after all.

It seems rejected research ideas conveniently translated into “shovel-ready” research ideas.

Congress is set to approve an add-on to the February stimulus law that will allow public-transit agencies, including New York’s state-run Metropolitan Transportation Authority, to spend 10 percent of their stimulus money on operating costs, rather than for capital projects, the Daily News reports. (more…)

[See update at end of item.]

Buried in one of the nine state budget bills now pending in Albany is what looks like a $1 billion federal stimulus aid slush fund, which could be “suballocated” by the governor to “to any state department, agency or public authority” consistent with the purposes set forth by Congress in the stimulus law (officially entitled as the American Recovery and Reinvestment Act of 2009).

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Governor Paterson and state legislative leaders announced today that they’ve agreed to use most of New York’s unfettered federal stimulus money to restore spending to the governor’s budget and to avoid any further spending cuts.  The result will be to partially re-inflate an unsustainable budgetary baseline and to expand the budget gap in future years.

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Today’s Times article on the lessons that America can draw from Japan’s experience in investing in public works as economic stimulus made some good points.

However, some of the numbers the article cites — on which kind of public investments deliver the greatest bang for each buck spent – may seem useful, but are not relevant to our current situation. (more…)