Mark Ruddeforth saved about $7,500 in initiation fees on a $343,000 U.S. Small Business Administration-backed loan for his Rapid City area business, Horse Creek Inn.
Receiving approval of the loan made Ruddeforth one of the first business owners in South Dakota to benefit from the recently passed Small Business Jobs Act of 2010, which extends and enhances certain provisions in the American Recovery and Reinvestment Act.
Signed by President Barack Obama in late September, the act affected SBA commercial lending for the 504 loan by raising the maximum net worth requirement for a business to qualify from $8.5 million to $15 million; increasing the maximum loan amount from $2 million to $5 million; and charging the bulk of the loan initiation fees to the government, according to Fran White, SBA 504 loan officer for western South Dakota.
The act is expected to benefit a larger group of small businesses.
“I’m already working on four loans that I couldn’t have been working on three weeks ago,” said White, who works with Black Hills Community Economic Development in Rapid City [Holly Meyer, "Local Business Owner Benefits from Stimulus Loan Program," Rapid City Journal, 2010.10.13].
President signs the bill two weeks ago, and already it's saving South Dakota businesses money. Who says government can't act fast to help the economy?
Ah, but what good is a measly $7500 in savings?
“Every little bit helps,” Ruddeforth said. “That’s 3 percent of gross revenue that is back in your pocket that can go back into the business.”
The saved and borrowed money will help with renovations to the property, including cabins and the restaurant dining room. Ruddeforth also added two full-time positions to his already eight-person full-time and part-time staff [Meyer, 2010.10.13].
Added two full-time positions. Added.
Ruddeforth also notes that this loan might not have happened without the stimulus, since commercial lenders are still balking at shaking loose funds. When the private sector can't keep the economy going, we step in as government to fill the gap.
Congresswoman Stephanie Herseth Sandlin and Senator Tim Johnson supported this legislation. Senator John Thune did not. Neither did Rep. John Bohener or anyone else Kristi Noem would vote for for Speaker.
I told you, Kristi, and so did Stephanie: the stimulus is working.
Let's see. In the words of what's his name on CBS's sunday morning show, "this the best ya got?"
ReplyDeleteWhy do I feel like my parents went to London and all I got was a t-shirt that says "Kick Me again" and when I looked in my children's checking account I found out they had taken the cost of the trip out of their account?
Because it is the truth.
Fact:
South Dakota has been awarded $1.2 Billion, received $446 million, and the recipients created 3,200 jobs. This comes to $125,000 per job. What a frickin' joke.
P.S. 1.5 years after the bill has been passed, the incompetent in chief has only awarded $202Billion and distributed $87Billion. At this pace, the stimulus will get out "stimulating" in six years.
Maybe Obama knows something we hope isn't true, we are still in a recession and in need of stimulus in six years.
Troy, did you just say the stimulus created jobs? I thought Kristi said it failed to do that. I guess I do find you a bit more trustworthy than Kristi, so I'll just have to conclude the stimulus is working....
ReplyDeleteYour arithmetic is o.k., but the words around it may be problematic. Sure, if the only return on the stimulus was jobs, then $125K per job might seem steep (unless you're hiring me: I'm worth every penny! :-) ).
But consider that along with putting people to work, we're getting other goods and services. Consider the $6M stimulus grant DSU got to work on electronic health records (EHR). Sure, that money has hired a few people. It's also providing services to hospitals, helping them implement EHR faster (oooh, which means they'll be buying computer hardware and software, which is more economic activity). EHR can help doctors and nurses practice better medicine, avoid errors, and save lives (insert your favorite dollar figure for not getting an overdose of drug X from the nurse). And conceivably (we're running far down the line, but this isn't fairy tales!) when the doctor in Gettysburg punches Rancher Bob's info into the EHR and the doctor at Sioux Falls Avera can access it, study the data, even do a consult online, that EHR system saves Rancher Bob a day-long trip to Sioux Falls, allowing him to spend time at home vaccinating cattle.
If all you do is divide dollars by jobs, then sure, you're going to get what looks like a weak return. Jobs are important, and we're getting them (not as many as we'd all like, but still better than revisiting 1933). But we're also getting lots of other benefits that the country needs.
And Troy, maybe we're looking at different numbers on amount of stimulus done, but ProPublica reports as of October 4th:
--$304B spent
--$140B in process
--$67B left to spend
--$233B in tax cuts issued
--$55B in tax cuts still to come
I will admit that 0.008% of that $304B went to dead people and inmates via SSA. Oops.
People unememployed in the US:
ReplyDeleteMarch 2009 when stimulus passed: 12,648,000.
September 2010: 14,742,000
Increase in number of unemployed is over 2,000,000 people.
Cory, you keep confusing two issues:
The stimulus was sold to us as the means to get people back to work. If you think this worked, I'd hate to have seen it fail in your eyes.
The individual projects you mention and their merits were not rationale for the $800Billion expenditure. If they were so meritorious and can stand on their own, they should have been sold on their merits.
It was a classic bait and switch.
Troy, you keep oversimplifying one issue. You want to pick one metric that favors your argument and say the stimulus was about nothing else. I may have time to check the record later, but in 2008-2009, didn't the pols and experts say the stimulus was about creating jobs and a whole lot more, like saving the world economy from depression? Now sure, if your metric is lower unemployment, we're not there yet. If your metric is no depression and fewer job losses than would have happened by not stimulating... well, then you have a hard hypothesis to prove (although Blinder and Zandi have tried). If your metric is creating jobs and flowing credit that the private market wouldn't, then anecdotes like the above say yes we did! If your metric is an economic soft landing instead of a full tilt crash, then I look around and say, yeah, not bad. We're not flying again, and we have a lot of damage to fix, but we didn't crash and burn.
ReplyDeleteCory,
ReplyDeleteI'm not picking my own metric. I'm picking the one Obama told me to pick.
The stimuls was about creating jobs. Saving the world from financial collapse was what the TARP was about. You are confusing the two.
One worked (as you said yourself) and one didn't.
Unfortunately, Herseth voted against the one that worked and for the one that didn't.
Time Magazine, July 2009 (not this July)
"Back in early January, when Barack Obama was still President-elect, two of his chief economic advisers — leading proponents of a stimulus bill — predicted that the passage of a large economic-aid package would boost the economy and keep the unemployment rate below 8%. It hasn't quite worked out that way. Last month, the jobless rate in the U.S. hit 9.5%, the highest level it has reached since 1983. . . . Without the stimulus, the two economists predicted, the unemployment rate would rise to around 8.5% by the middle of this year; add the stimulus, and that rate would drop by half a point. In reality, the unemployment rate is a full percentage point higher than what Romer and Bernstein predicted it would be without a stimulus."
The Obama Administration didn't say it would keep unemployment below 10%. They said 8%.
But, maybe they will be right. :)
"
In a report released on July 13, Romer's Council of Economic Advisers says the stimulus bill is creating opportunities for workers in health care, education and energy. The report reiterates that the economists believe the stimulus plan will create 3.5 million jobs by the end of 2010."
If we start adding a million jobs a month for the rest of the year . . . They will be right. Granted, we lost 95,000 jobs last month. But miracles happen.
You're right, Troy: I can't deny that we missed the mark on that unemployment projection.
ReplyDeleteBut look at the lead paragraph on the White House's webpage on ARRA:
"The evidence is clear – and growing by the day – that the Recovery Act is working to cushion the greatest economic crisis since the Great Depression and lay a new foundation for economic growth. Public and private forecasters ranging from the Council of Economic Advisors to Moody’s Economy and IHS Global have said the Recovery Act was responsible for 2 million jobs or even more nationwide in the first year alone. These jobs have also laid the groundwork for a new clean energy economy, revitalized infrastructure and transportation, helped transform health information technology, and helped make America more competitive for generations to come."
Job creation: not as good as we hoped. But as I said above, the stimulus was about more than just the jobs number. Your argument is like saying you're unhappy with the car you bought because it's getting less gas mileage than the sticker said it would. That's a valid complaint, especially if that's the only reason you bought the car. But the stimulus car is running a heck of a lot better than the beater we had before that was about to drop its transmission on the road.