What’s on your mind, Bleeding Heartland readers? Here’s an open thread: all topics welcome.
Monday marked the fifth anniversary of President Barack Obama signing the American Recovery and Reinvestment Act (better known as the federal stimulus) into law. Bleeding Heartland has long held that the stimulus mitigated the impact of the “Great Recession,” in part because the package saved Iowa and other states from enacting deep cuts in public services and . The stimulus had flaws, stemming primarily from the president aiming too low on the size of the package and concessions made to win a handful of conservative votes in Congress.
After the jump I’ve posted more links on the recovery act’s impact.
P.S. – The dumbest thing I’ve read this week was Kevin Hall’s comment for The Iowa Republican blog about former State Senator Swati Dandekar, a candidate for Congress in the first district. “Swati Dandekar is obviously an intelligent and accomplished woman. However, she speaks in broken English and I don’t think that translates very well to a wide electorate.” Reality: Dandekar’s English is very fluent. Having a noticeable accent is different from not speaking a language well. I would like to hear Hall try to talk in a non-native language.
The White House published a report to mark the fifth anniversary of the stimulus law. Excerpt from the summary:
The Recovery Act, by itself, saved or created about 6 million job-years, where a job-year is defined as one full-time job for one year. This translates to an average of 1.6 million jobs a year for four years through the end of 2012. This estimate is within the range of estimates provided by the Congressional Budget Office and other outside organizations.
Combining the effects of the Recovery Act and the additional fiscal measures that followed, the cumulative gain in employment was about 9 million job-years through the end of 2012.
Including both the Recovery Act and subsequent fiscal measures, half of the total fiscal support for the economy, or $689 billion, came in the form of tax cuts-mostly directed at families. The remainder went to investments in critical areas such as rebuilding bridges and roads, supporting teacher jobs, and providing temporary help for those who found themselves unemployed or in need of assistance because of the Great Recession.
The investments made through the Recovery Act will have a positive impact on long-run growth, raising the economy’s potential output and ultimately offsetting much of the Act’s initial cost. For instance, the Recovery Act improved more than 40,000 miles of road and over 2,700 bridges, brought 693 drinking water systems serving over 48 million Americans into compliance with the Clean Water Act, made high-speed internet available to about 20,000 community institutions, and launched the Race to the Top program, which incentivized 34 states to improve their education policies.
While these figures are substantial, they still nevertheless understate the full magnitude of the Administration’s response to the crisis. Because the report released today focuses exclusively on the effects of fiscal legislation, it does not assess other Administration policies that stabilized the financial system, rescued the auto industry, and supported the housing sector-all actions that made significant contributions to spurring the recovery.
Dave Johnson published a chart showing that “The stimulus worked, but it was not [large] enough.”
Writing for the Center on Budget and Policy Priorities blog, Arloc Sherman argues,
When it comes to using the safety net to keep people out of poverty, for example, the Recovery Act was probably the most effective piece of legislation since the 1935 Social Security Act, as our 2011 analysis explained.
Click through to see a chart with more details on the estimated 6.9 million people who were kept out of poverty thanks to provisions in the stimulus law.
Conservatives often assert that the stimulus “failed” and that Obama should have focused on deep tax cuts only. Bruce Bartlett, a former economist in the Reagan administration, demolished that argument in this post from 2009: “Why the Economy Needs Spending, Not Tax Cuts.” Excerpt:
I continue to believe that the Republican position is nonsensical. Final proof is that the previously cited CBO report shows total federal revenues coming in at 14.9 percent of the gross domestic product in FY2009. According to the Office of Management and Budget, one has to go back to 1950 to find a year when federal revenues were lower as a share of GDP. For reference, revenues averaged 18 percent of GDP during the Reagan administration and were never lower than 17.3 percent – 2.4 percent of GDP above where they are now.
I think there are grounds on which to criticize the Obama administration’s anti-recession actions. But spending too much is not one of them. Indeed, based on this analysis, it is pretty obvious that spending – real spending on things like public works – has been grossly inadequate. The idea that Reagan-style tax cuts would have done anything is just nuts.