Editore"s Note
Tilting at Windmills

Email Newsletter icon, E-mail Newsletter icon, Email List icon, E-mail List icon Sign up for Free News & Updates

February 17, 2010

FINDING SUCCESS ONE YEAR LATER.... With the first anniversary of the stimulus package coming today, there's going to be a fair amount of analysis on the merits of the economic recovery initiative. A good place to start would be this piece from the NYT's David Leonhardt.

Imagine if, one year ago, Congress had passed a stimulus bill that really worked.

Let's say this bill had started spending money within a matter of weeks and had rapidly helped the economy. Let's also imagine it was large enough to have had a huge impact on jobs -- employing something like two million people who would otherwise be unemployed right now.

If that had happened, what would the economy look like today?

Well, it would look almost exactly as it does now. Because those nice descriptions of the stimulus that I just gave aren't hypothetical. They are descriptions of the actual bill.

Among people who know what they're talking about, the fact that the stimulus has been successful isn't even controversial anymore. The leading economic research firms -- IHS Global Insight, Macroeconomic Advisers, and Moody's Economy.com -- estimate that the effort has already created as many as 1.8 million jobs, and will create about 2.5 million jobs when all is said and done. As far as the independent Congressional Budget Office is concerned, those are conservative estimates -- the CBO believes the stimulus is already responsible for as many as 2.4 million jobs.

Leonhardt describes the skeptics as "misguided," adding that one can "pick just about any area of the economy" and find evidence of success.

To be sure, the recovery effort should have been bigger and more ambitious. And it would have been, had Senate Republican "moderates" not demanded that the bill be scaled back, offering less assistance to states and local governments -- one of the most effective areas of the legislation. As has become apparent, changing bills to generate "bipartisan" support invariably means making the bills worse, and the stimulus, alas, fits this model.

But the Recovery Act was nevertheless instrumental is rescuing the economy from the abyss.

One year ago, we had three choices: approve the Democratic stimulus plan, approve the Republican spending-freeze plan, or do nothing. We can all be deeply thankful President Obama and a Democratic congressional majority were in office at the time, because two of those three options would likely have been cataclysmic for the global economy.

That Republicans still claim any credibility on this issue is literally laughable. Every time they claim the stimulus didn't work -- an argument we'll no doubt be hearing quite a bit today -- the GOP, which was responsible for getting us into this mess in the first place, looks a little more ridiculous.

Steve Benen 8:00 AM Permalink | Trackbacks | Comments (22)

Bookmark and Share
 
Comments

We lost over 8.5 million jobs.

Posted by: par4 on February 17, 2010 at 8:14 AM | PERMALINK

Alas, they look less ridiculous than you or I might like, with the unemployment rate hovering near 10%. The Dems don't get credit for "it coulda been a lot worse" or "we're really trying for bipartisan support, really!"

Posted by: BrklynLibrul on February 17, 2010 at 8:14 AM | PERMALINK

Saying the stimulus worked is like saying, "I just spent $50k on my credit card, but look at all the stuff I got - clothes, furniture, vacations. Did it work in making me better off this year? Yes!"

Was the stimulus money efficiently and effectively spent at $437k per job? No. Are the jobs real and long lasting? No. Do we have a lot of debt with little to show for it? Yes

Posted by: skeptic1 on February 17, 2010 at 8:21 AM | PERMALINK

787 billion for 2 million jobs? I don't call that a success.

Posted by: Rick on February 17, 2010 at 8:24 AM | PERMALINK

If this is suck-sess, we're in a lot more trouble than the Villagers of Washington can imagine... oh, wait...nothing new there...

Half-measures for the masses.
Welp, it does beat the Bush/Cheney no measures for the masses.

Yahoo, the Not-Bush team!

Posted by: neill on February 17, 2010 at 8:27 AM | PERMALINK

The stimulus wasn't just about creating jobs. It was about saving businesses as well.

Posted by: pol on February 17, 2010 at 8:34 AM | PERMALINK

So where did all that extra money go for those two million jobs - or did the stimulus package create/save two million really wealthy people?

Also, as the economy sheds jobs, is the stimulus really creating jobs, or just slowing the losses?

Has anyone really created a metric to determine when the stimulus has "saved" a job? I've heard several different metrics, all of which seem a bit far-fetched.

Posted by: Joshua on February 17, 2010 at 8:37 AM | PERMALINK

Emergency treatment is always incredibly expensive. It's like our economy had to be carried by ambulance to the E.R., it's heart started by defibrillation, and then had an emergency quadruple bypass. Much more costly than keeping the patient healthy, but still cheaper than trying to revive them after they die.

Unfortunately, nothing has been done yet to change the bad habits of our "patient", so it looks like the economy will be right back in the E.R. in a few years.


Posted by: SteveT on February 17, 2010 at 8:37 AM | PERMALINK

"787 billion for 2 million jobs? I don't call that a success."

You're figures are off. Approximately $272 billion is the current spending and tax benefit figures. 92.8 billion is current tax bennies.

http://www.recovery.gov/Pages/home.aspx

Posted by: Dave on February 17, 2010 at 8:46 AM | PERMALINK

i'm not sure how this effort to measure the stimulus in dollars per job became popular, but it is seriously misguided. this was not purely a "jobs bill," and it was never meant to be. indeed, jobs are really just a pleasant side effect, an indirect result of the stimulus bill. government stimulus really has one macroeconomic purpose: as businesses and households spend less money, GDP contracts. there is a risk this creates a self-feeding spiral -- as GDP contracts, business and consumer confidence decrease, so they spend less, and GDP drops farther, etc. If you think of it as a line graph over time, with parts of the area under the GDP line made up of business, household and government spending, when the line drops sharply stimulus is merely government spending filling the space to keep the line as flat -- or at least as slowly dropping -- as possible. that is, the point of stimulus is to keep the cycle from hitting the tipping point where the economy goes into a death spiral.

job creation/savings is part of it. but so is liquidity in the financial system (in late 08-early 09 this was probably the single largest purpose), business and consumer confidence, direct spending to keep additional business closures from ocurring, support for state and local governments, etc. it simply makes no sense to measure a stimulus package solely in jobs, much less in dollars per job. it is a metric built on a false premise.

Posted by: zeitgeist on February 17, 2010 at 8:52 AM | PERMALINK

Dave's right. Most of the money has yet to be spent.

It took us years to "gain all this weight", and it will takes just as long to lose it. As Steve T says, emergency treatment is expensive- liposuction and stomach stapling, instead of diet and exercise.

Posted by: DAY on February 17, 2010 at 8:53 AM | PERMALINK

...the GOP, which was responsible for getting us into this mess in the first place, looks a little more ridiculous.

Only to us, those who actively seek out and digest the truth.

No one on the major TV networks or in the media will call any Republican out when they spout this drivel that the stimulus failed, much less posit that if their "tax cuts for bipartisanship" had not been put in--and instead that amount was used as spending--we would have more jobs and would be on a path to a quicker recovery.

Posted by: terraformer on February 17, 2010 at 8:53 AM | PERMALINK

And it would have been, had Senate Republican "moderates" not demanded that the bill be scaled back"

Romer said $1.2 trillion. Obama whose afraid to say trillion cut it to $900b. Blaming Republicans for Obama's refusal to do the right thing is just foolish. Obama reduced it by $300b, the Senate by $200b.

Posted by: Rob on February 17, 2010 at 8:56 AM | PERMALINK

I could just be imagining it, but can someone please explain to me why Republicans are constantly being invited on television to lie about the stimulus or healthcare reform or any other initiative of the current government, without any pushback from Democrats, but if anyone makes an argument in favor of those policies on the merits, rather than the day's polls, we can count on Eric Cantor or Mitch McConnell being invited to scream "Socialism" in the name of "balance"?

It has made political television unwatchable for at least the past 8 months.

Posted by: Rob on February 17, 2010 at 8:56 AM | PERMALINK

Saying the stimulus worked is like saying, "I just spent $50k on my credit card, but look at all the stuff I got - clothes, furniture, vacations. Did it work in making me better off this year? Yes!"

Was the stimulus money efficiently and effectively spent at $437k per job? No. Are the jobs real and long lasting? No. Do we have a lot of debt with little to show for it? Yes

Posted by: skeptic1 on February 17, 2010 at 8:21 AM

The problem, Rick, isn't that we used the credit card in a time of trouble, but problem is we have wasted the time we bought. Where is the long term recovery plan? Where are the educational, industrial, and related policies intended to restore our economy? Crickets from Washington. The best we have from Washington is the Republican plan of returning to the same policies that got us into this mess in the first place. Peachy. Democrats have been too busy finding fraidy holes or taking money from industry lobbiests to actually look over the horizon.

My greatest fear has always been that the time bought with the stimulus will be squandered and we will dive right back into the abyss.

Posted by: Ron Byers on February 17, 2010 at 8:57 AM | PERMALINK

"787 billion for 2 million jobs? I don't call that a success."

If the 2 million had evaporated, the economic shock waves would have propagated into the economy, and triggered millions of more job losses. The truth is that if nothing had been done, the loss total would have been many times that 2 million.

We just have to wait until Spring when unarguable positive job growth occurs for the Republicans to stop propagating this latest bit of Frank Luntz wisdom.

Posted by: bob h on February 17, 2010 at 9:09 AM | PERMALINK

"Saying the stimulus worked is like saying, "I just spent $50k on my credit card, but look at all the stuff I got - clothes, furniture, vacations. Did it work in making me better off this year? Yes!"

First, trying to compare an individual's household budget to a national budget like this will inevitably lead to confusion. And packed into this one sentence is a second fundamental confusion between consumption and capital investment. A huge chunk of ARRA was not spent on consumption in the sense of clothes, vacations, etc., but on capital investments (infrastructure, education, research, etc.) more akin to a car or a house -- something that makes you more productive in the future.

That said, Steve, this is preaching to the choir. The question is how to get people to understand basic things like this in the face of a concerted effort by special interests to confuse them in just these ways.

Posted by: larry birnbaum on February 17, 2010 at 9:31 AM | PERMALINK

It may have been successful, but it hasn't been really visible, and that is the problem. It's a bunch of little signs on a bunch of small projects, many of which go unnoticed, and many of which were in progress before the Act. In saying it "saved or created 2 million jobs" one is shot down by the rejoinder of "show me" because the skeptic will not sit long enough for you to show him three jobs in Wheaton IL, seven jobs in Brookfield WI, four jobs in... About 1% into your list of minilocations he says you are full of it and walks off. You may be right, but you will never illustrate it believably.

An acquaintance of mine is a contractor to the California DOT, working on an I-15 expansion near San Diego. He has been on that job for the past two years, is still on it with the same number of employees, and has never at any time advised that his project in danger of being cut back. CalTrans came out and put one of those signs on his project, "This project is being funded by..." How many jobs were "created or saved" by that sign?

Posted by: Bill H on February 17, 2010 at 9:57 AM | PERMALINK

A huge chunk of ARRA was not spent on consumption in the sense of clothes, vacations, etc., but on capital investments (infrastructure, education, research, etc.) more akin to a car or a house -- something that makes you more productive in the future.

Another other huge chunk was spent on tax cuts, and the final huge chunk of the three huge chunks was spent on states to, you know, keep fire fighters, police, and teachers employed.

That's not spending on furniture, clothes, and vacations. That's spending on gas, utilities, and rent to keep this fucked-up red-neck nation going.

Posted by: oh my on February 17, 2010 at 10:00 AM | PERMALINK

"Most economists say the stimulus was a resounding failure and polls say only 6% of the American public think it was a success."

Oh, that's not my words but the words I heard on TV first thing this morning on the local and national news networks.

While I applaud what was done last year (I actually think it should have been a much stronger stimulus), news such as what was spurted out this morning gives a distorted and simplistic view of the plan. I hate to think where we would be right now even without this modest stimulus package. I'm not naive enough to say it was an overwhelming success, but at the same time the news networks are also doing a disservice. They paint Obama's first big program as a failure.

Oh what a surprise that is!

Good luck Mr. President. You either need to get a better publicist or provide bolder, stronger measures for bigger impact. With the current atmosphere out there, it ain't gonna be easy.

Posted by: whichwitch on February 17, 2010 at 10:22 AM | PERMALINK

Marketplace had an infuriating conversation between the host and Bob Moon last night on this topic. The entire thrust of the piece was, did the stimulus work? No one knows, we certainly don't. Believe whatever you want.

Posted by: dob on February 17, 2010 at 11:01 AM | PERMALINK

"Every time they claim the stimulus didn't work -- an argument we'll no doubt be hearing quite a bit today -- the GOP, which was responsible for getting us into this mess in the first place, looks a little more ridiculous."
Steve Benen 8:00 AM

Yes, to the 5% of the population that has both the ability and the will to seek out the actual data and/or the assessments of qualified professionals.
The 95% who don't care, or care but are too busy to undertake the due diligence -- a considerable effort at this point -- to find the truth, are going to believe what the mass media tell them, which will be the Pubbie lies.
The only way to counter this is by having every major Dem, and every pundit who appreciates reality, to repeat many times over the next few weeks that the Pubbies are lying, and that they know they're lying, as evidenced by their efforts to secure stimulus funding for their constitutencies -- and that these efforts PRECEDED their no-votes on the stimulus bill.
That last part is necessary to defuse the claim that if the money was to be squandered anyway, they needed to get some benefit for their own state.
Of course, anyone with a brain would realise that even if the cash-grabs all took place only after passage of the bill was a done deal, they're still implicit but undeniable acknowledgements that the stimulus money DOES "create or preserve jobs."
But the crucial wording there is "anyone with a brain."

Posted by: smartalek on February 17, 2010 at 3:41 PM | PERMALINK




 

 

Read Jonathan Rowe remembrance and articles
Email Newsletter icon, E-mail Newsletter icon, Email List icon, E-mail List icon Sign up for Free News & Updates

Advertise in WM



buy from Amazon and
support the Monthly