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

August 24, 2010

CONGRESSIONAL BUDGET OFFICE STEPS ALL OVER BOEHNER'S MESSAGE.... In his exceedingly silly speech on the economy today, House Minority Leader John Boehner (R-Ohio) proudly proclaimed, "All this 'stimulus' spending has gotten us nowhere."

And almost immediately thereafter, the CBO made Boehner look pretty foolish.

The oft-criticized stimulus plan boosted the economy in the second quarter by as much as 4.5%, the Congressional Budget Office said on Tuesday.

In a report published the same day as Minority Leader John Boehner's criticism of President Obama's economic policy, the CBO said the stimulus law boosted the economy by between 1.7% and 4.5%, lowered the unemployment rate by between 0.7 percentage points and 1.8 percentage points and increased the number of people employed by between 1.4 million and 3.3 million.

This seems pretty significant, so let's look at it from a few different angles.

First, as a real-world matter, economic growth was pretty slow in the second quarter (April to June), but the CBO report makes clear that without the stimulus, it wouldn't have grown at all. In other words, a stimulus helped lead to tepid growth -- the absence of a stimulus would have been significant economic contraction.

Second, this CBO data, like reports from the Council of Economic Advisors and the Office of Management and Budget, should effectively end the debate about whether the Recovery Act did what it set out to do. The stimulus effort was too small -- criticism from conservative Republicans is completely backwards -- but as designed, it was intended to give the economy a significant boost, and save and create millions of jobs. It did exactly that. Anyone who argues otherwise is either not paying attention or is being willfully dishonest.

Third, the White House would be smart to trumpet the CBO report pretty loudly, especially today, but the same political dynamic that's existed for months continues to be a problem -- the stimulus prevented a catastrophe, and Republicans were spectacularly wrong at the moment of crisis, but the economy is still hurting badly. Saying "it would have been much worse" is entirely accurate. It's also entirely unpersuasive in a country burdened by fear and high unemployment.

And finally, by way of a reminder as to how truly nonsensical our politics can be, also note that the economy could use another boost to prevent it from slipping even further backwards. The CBO makes abundantly clear that the stimulus worked in generating growth and creating jobs. So, does that mean we'll get another stimulus to generate more growth and create more jobs? Of course not -- Republicans choose not to believe the data, want less of what worked, and won't allow a vote on the most effective elements of the policy. Voters say they want less spending -- even though more spending would improve the economy -- and congressional Democrats are unlikely to even try to push for more recovery efforts, fearing a public backlash against sound policies that work.

The stimulus worked, and we need more. The country is convinced it failed, and demands less.

We know what the economy needs; we know how to make it happen; and our politics just won't let us get from here to there.

Steve Benen 4:30 PM Permalink | Trackbacks | Comments (20)

Bookmark and Share
 
Comments

Lots of posts today, steve, but I agree with other commenters - your posts of animated excretion of feces are much more valuable than your political analysis or insight.

Can we have less DC insider stuff and more doodie?

Posted by: echidne on August 24, 2010 at 4:31 PM | PERMALINK

Thing about DC insider stuff is, national decisions tend to get made inside DC.
But what do I know, I'm just an abandoned tool rotting away in someone's backyard. My owner hates the government, too.

Posted by: rusty chainsaw on August 24, 2010 at 4:34 PM | PERMALINK

a stimulus helped lead to tepid growth -- the absence of a stimulus would have been significant economic contraction.

It simply doesn't follow that no stimulus would've led to a "significant" contraction. The stimulus, such as it was, resulted in, as you say, tepid growth, so wouldn't it stand to reason that no stimulus would've resulted in either no growth or slightly negative growth? You're making a completely unsupported assertion.

the White House would be smart to trumpet the CBO report pretty loudly, especially today, but the same political dynamic that's existed for months continues to be a problem -- the stimulus prevented a catastrophe

There's simply no objective evidence to bolster that assertion. The CBO analysis, like that of every major economist, concludes that the stimulus helped - but not that it averted a complete economic collapse, as you argue.

Posted by: bubba on August 24, 2010 at 4:37 PM | PERMALINK

Third, the White House would be smart to trumpet the CBO report pretty loudly

Until the Democrats as a whole learn a little message discipline the White House and trumpet all it wants and noboby will ever hear it. I'd lay strong odds Gibbs will highlight this report in his briefings for the next couple of days. Obama will probably mention it during the Saturday radio address. Other administration officials will talk it up as well.

And we will hear exactly none of it in the MSM. The Democratic congressmen who speak on the various talk shows over the next few days will either not mention it at all or repeat Republican talking points. Most of the pundit class (left and right) will spend their time talking about the 'Ground Zero Mosque' silliness or some other meaningless drivel and the public will continue on ever more ignorant of the world around them.

Posted by: thorin-1 on August 24, 2010 at 4:52 PM | PERMALINK

Thanks, Liberal Media! At least you were all over the Dean scream and Gore + Internet!

Posted by: r on August 24, 2010 at 4:53 PM | PERMALINK

-and as we speak, Neil Cavutto and friends on Fox are making snarky noises at the Vice President, the CBO, and anyone else who strays from the party line.

Example; each job created costs a gazillion dollars. And that is something even the stupidest view can wrap their tiny little minds around. Truthiness is irrelevant. . .

Posted by: DAY on August 24, 2010 at 4:56 PM | PERMALINK

Our politics have all the credibility of something to good to be true on one side of the aisle and the object of scorn in the first panel of a Charles Atlas advertisement appearing opposite . The level of interest and the commitment to that con are about the same sort that is observable with hogwash , at least for the hogs . That this would encourage an energetic and naive response from the paladins of fear along with their boisterous bullies is a foregone pity . At least they are honest here with their droppings .

Posted by: FRP on August 24, 2010 at 4:57 PM | PERMALINK
Voters say they want less spending ...

Actually, that's not true. Most voters want jobs, regardless of spending.

http://www.gallup.com/poll/140786/americans-back-stimulus-spending-create-jobs.aspx

Sad to see Steve has bought the line, rather than the reality.

Posted by: Mark D on August 24, 2010 at 5:09 PM | PERMALINK

Frankly, as long as a majority of Americans want low taxes, a high level of government services (just for them, not other people) and a balanced budget while holding the government at fault for the impossibility of accomplishing these contradictory feats, they kind of deserve a lousy economy.

Posted by: JMG on August 24, 2010 at 5:10 PM | PERMALINK

Or as Mr. Mencken said, "Democracy is the theory that the common people know what they want and deserve to get it, good and hard."

Posted by: Davis X. Machina on August 24, 2010 at 5:14 PM | PERMALINK

Remember that Republicans will do very well this November. After that, there will be no help for the economy for two years. Unemployment benefit extensions? No. Emergency Medicaid aid? Sorry. And nothing to help keep teachers and cops on the job.

And in 2012, Republicans will point to this as more evidence that Democrats can't manage the economy.

If there were any justice, Republicans would be doing face time on Satan's ass.

Posted by: walt on August 24, 2010 at 5:17 PM | PERMALINK

Don't forget, the Republicans will wish to be elected in 2012, as well. Neither political party is very popular (can't imagine why), and voters could turn on them as easily as continue to blame Obama. So they will have an incentive to do SOMETHING. Big tax cuts for the wealthy, I imagine.

Posted by: JMG on August 24, 2010 at 5:30 PM | PERMALINK

Of course, it would help if we had an opposition party that didn't actually want the economy to fail.

Posted by: Marko on August 24, 2010 at 5:45 PM | PERMALINK

The message spin getting out to the public is what Boehner's appearance was targeting. Sounding "tough," "manly," and self-righteously assured while demandingthe resignation of Obama's economic team was the point. The Republican talent for bumper-sticker solutions continues.

Posted by: -syzygy- on August 24, 2010 at 5:56 PM | PERMALINK

Steve Benen must have been reading a Rassmussen poll, most of the American people are not worried about deficit spending--they are worried about the economy, specifically jobs.

Posted by: ghostcommander on August 24, 2010 at 7:58 PM | PERMALINK

It simply doesn't follow that no stimulus would've led to a "significant" contraction. The stimulus, such as it was, resulted in, as you say, tepid growth, so wouldn't it stand to reason that no stimulus would've resulted in either no growth or slightly negative growth? You're making a completely unsupported assertion.

Not so. The support for that assertion is called 'arithmetic.' This cited CBO report says, absent the stimulus effect, that the gdp would have been lower by between 1.7% and 4.5%, unemployment rate higher by .7 to 1.8 points, and with between 1.4 million and 3.3 million fewer employed.

Doing the arithmetic yields what the situation would be absent the stimulus spending, according to CBO. And it would be far more dire than the still horrendous situation obtaining today.

That only begins the analysis, because had that far worse situation obtained, it would have set the stage for still worse weakening.

Posted by: sofla on August 24, 2010 at 9:32 PM | PERMALINK

Doing the arithmetic yields what the situation would be absent the stimulus spending, according to CBO. And it would be far more dire than the still horrendous situation obtaining today

Which is bad, but is not "catastrophic." It's this catastrophic characterization I'm taking issue with - not the assertion that the economy would be worse. Obviously, the economy would've been worse.

Posted by: bubba on August 24, 2010 at 10:54 PM | PERMALINK

"Second, this CBO data, like reports from the Council of Economic Advisors and the Office of Management and Budget, should effectively end the debate about whether the Recovery Act did what it set out to do."

uh-huh. Someone doesn't know what he's talking about. Or does, but isn't honest.


Questioner: "If the stimulus bill did not do what it was originally forecast to do, then that would not have been detected by the subsequent analysis, right?"

Elmendorf: "That's right. That's right."

Posted by: a on August 25, 2010 at 12:30 AM | PERMALINK

Most states have used stimulus money to balance their budgets and keep cuts in jobs - teachers, EMTs, police - to a minimum. To have cut those jobs could reasobaly be called catastrophic. It is not simply that the Recovery Act saved a few million jobs directly - each of those jobs had ripple effects on helping others - store clerks, accountants,restaurants, civil engineers, etc keep their jobs. So a reasonable people can see where not spending the stimulus on jobs would have been catastrophic.Let's grant some subjectivity too - if you did not lose your job than the lose of the neighbor's down the street might not mean much. On the other hand if you were furloughed while your state or contracting private enterprise watied for funds - once again staring down the barrel of catastrophe.

CEA: ARRA raised employment "by between 2.2 and 2.8 million." In its third quarterly report on the American Recovery and Reinvestment Act of 2009, the Council of Economic Advisers (CEA) stated: "The CEA estimates that as of the first quarter of 2010, the ARRA has raised employment relative to what it otherwise would have been by between 2.2 and 2.8 million. These estimates are similar to those of other analysts, and are broadly consistent with the direct recipient reporting data available for 2009:Q4."

CBO (2009) estimates job impact of between 1.2 and 2.8 million. The nonpartisan Congressional Budget Office (CBO) estimated in May that as of the first quarter of 2010, the stimulus package "[i]ncreased the number of people employed by between 1.2 million and 2.8 million," and, "[i]ncreased the number of full-time equivalent jobs by 1.8 million to 4.1 million compared with what those amounts would have been otherwise." CBO also estimated that the unemployment rate would be 0.7 percent to 1.5 percent higher today without the stimulus package.

IHS/Global Insight estimates job impact of 1.7 million. PolitiFact.com stated on February 17 that "[u]sing updated estimates provided to PolitiFact, IHS/Global Insight estimates that 1.7 million jobs will be created or saved by the first quarter of 2010." The CEA report also cites this estimate from IHS/Global Insight.

Moody's Economy.com estimates job impact of 1.9 million. The PolitiFact.com post further stated that "[u]sing updated estimates provided to PolitiFact ... Moody's economy.com estimated that 1.9 million jobs will be created or saved" by the first quarter of 2010. The CEA report also cited this estimate from Moody's Economy.com.

Macroeconomic Advisers estimates job impact of 1.5 million. The CEA report stated that Macroeconomic Advisers estimates that the Recovery Act raised employment by 1.46 million as of the first quarter of 2010, citing an analysis provided to CEA.

Posted by: TLG on August 25, 2010 at 11:00 AM | PERMALINK

Bubba, you would have a point, if one thinks that a negative 2% or 3% gdp decline is not a 'significant' contraction, or that hitting somewheres north of 11% unemployment (the worst since the Great Depression) isn't catastrophic.

Opinions can vary, of course, but had any such numbers obtained, I and I believe most people would consider it both a significant contraction, and close enough to be characterized as catastrophic.

We would have had neither the 650,000 increase in private employment, nor the confidence from business to restock their inventories, which was the other main factor in gdp growth from the private sector.

Posted by: sofla on August 25, 2010 at 6:37 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