Harry Davis thinks too much of the stimulus spending is next year.
The Appalachian State University finance professor, who is the economist for the N.C. Bankers Association, said only 30 percent of the $789 billion stimulus package signed by President Obama will be spent this year.
He said that creates several problems:
NOT STIMULATING. Money spent next year will likely be after the economy has start to recover, so it won't be stimulus, by definition.
TOO MUCH DEBT. The additional spending and ongoing federal budget deficits are pushing debt too high, leading to a risk of inflation that could hurt the recovery.
NOT ONGOING. He said the infrastructure spending is necessary, but it ought to be included in the annual budget because it is an ongoing need.
"We need to spend money on infrastructure five years from now, so we need to get this spending in the regular budget, as opposed to this one-time shot in the arm," he said.
More after the jump.
Davis said the money for Medicare will help, since it will decrease what is otherwise a "huge drag" on the state budget. That will free up North Carolina to spend that money on its own infrastructure projects to help the economy recover.
He also noted that some of the money not specifically designated for the state will help here anyway, such as national weatherization programs and spending to update medical records systems.
He also praised the tax cuts for the middle class and businesses included in the stimulus package, saying those would also help.
But overall, he was concerned about the size of the national debt and its financing by the Chinese and Japanese governments.
"I'm not sure we can continue to run these kinds of deficits and asking the rest of the world to finance it," he said. "To pay for the stimulus, we're basically going to call the Chinese and Japanese and tell them to put it on the tab."