WHY IT WAS GOOD TO AID THE STATES

It prevented state layoffs at a time when the private sector was also laying off workers.

Unemployment, The Economy And The Chicken-and-Egg Conundrum
by Sarah McBride
Planet Money
09:16 am
August 6, 2010

Standard & Poor's chief economist David Wyss says that gradually, consumers just stop worrying about losing their jobs and little by little start spending again.

The public sector lost 202,000 jobs, as census workers were laid off and local governments made cutbacks. To a large extent, these are jobs state and local governments would have shed last year but didn't because of the federal stimulus package.

"You've extended the adjustment process," Wyss says, which he believes is better than having the blow of government and private-sector cuts all at once. "By extending it, now the government-sector cuts are coming when the private sector is starting to hire," lessening the blow, he says.