Monday, May 16, 2011

Did the Stimulus or ARRA Work?

Did the Stimulus Work?

When you look at the program as a whole, the picture is not nearly as uncertain. Home buying jumped during the very period when a tax credit for home buying was in effect. The same happened with corporate investment. State spending stabilized in the middle of last year — just as states were hearing about their stimulus awards — even though state revenues were continuing to fall at the time. Consumer spending has risen faster than income growth would suggest, but about as fast as you’d expect given the combination of income growth and stimulus tax cuts.

More broadly, job cuts began shrinking just as the stimulus was going into effect last year, and the stock market began rising shortly after it passed. The stimulus was by no means the only reason, but it appears to have been a significant one.

Based on its economic models, the Congressional Budget Office recently estimated that between 1.4 million and 3.4 million workers who have jobs would be unemployed if the stimulus hadn’t been enacted. Three of the best-known private economic research firms — IHS Global Insight, Macroeconomic Advisers and Moody’s — have come up with similar estimates. The average estimated effect on employment is about 2.5 million jobs.

Nariman Behravesh, IHS Global Insight’s chief economist, has a nice way of summarizing what the bill did (and, to some extent, didn’t) do: “It prevented things from getting much worse than they otherwise would have been. I think everyone would have to acknowledge that’s a good thing.”

You would think conservative Republicans would just change the subject. The economy did a nose dive while they were in charge. The country lost trillions in wealth - people lost jobs and their homes. They apparently would have done nothing to fix the problems that happened on their watch.  Conservatives Continue To Claim The Stimulus ‘Failed,’ After CBO Report Said Otherwise

This effort comes in the wake of a Congressional Budget Office (CBO) report showing that the economic stimulus package is having its intended effect — creating or saving 600,000 to 1.6 million jobs — albeit in a weaker than anticipated economy.

Republicans, though, have said that additional jobs legislation “would meet resistance.” They’re justifying this position — aided by the conservative media — by claiming that the “failed economic stimulus” has not created jobs, despite the CBO reporting otherwise. Here’s a roundup of conservative statements that have occurred after the CBO released its report:

    Rep. Eric Cantor (R-VA): The 800-billion dollar stimulus bill that Washington passed has failed to create – or save – the jobs it promised…There is now talk of a second — or is it a third – stimulus bill…More government spending, more bailouts for states, more transfer payments to individuals, expanded government agencies.

    RNC Chairman Michael Steele: [Obama's] failed economic stimulus has considerably added to our national debt, skyrocketing it to a record-breaking $1.42 trillion in 2009…This time using a “jobs summit” to distract from the 10.2 percent national unemployment rate as well as President Obama’s and Congressional Democrats’ plans to unleash a second wave of stimulus spending on the American public, known as Stimulus II.

    Rep. John Boehner (R-OH): Washington Democrats staked their credibility on a nearly trillion-dollar ‘stimulus’ that was supposed to be about putting people back to work…Given the last 11 months of outrageous ‘stimulus’ claims, the American people are right to wonder whether Washington Democrats can be trusted to create jobs and cut the deficit.

    Wall Street Journal Editorial Board: [T]he stimulus has been a manifest bust, much as the critics who appeared on our pages predicted. As the recovery continues, sooner or later the economy will begin to create new jobs, thank heaven. But the stimulus won’t have much do with it, except insofar as the higher taxes to finance the runaway spending further retard private investment and hiring.

For their part, Republicans have organized an economic roundtable for today, chock full of former Bush administration and McCain campaign staffers who, among other things, are responsible for the Bush tax cuts and Medicare Part D. Cantor also released a jobs plan yesterday, which Andrew Leonard characterized as a “magic pony jobs plan.” “Cut regulations. Freeze spending. Cut taxes. No new taxes. That’s the plan,” Leonard wrote. New CBO Report Finds Up to 3.6 Million People Owe Their Jobs to the Recovery Act