Friday was the third anniversary of the passage of the American Recovery and Reinvestment Act of 2009 (known generally as the Obama stimulus package.) The trillion dollar initiative designed to prevent a full slide into depression during the early days of the new administration. While critics everywhere focus on question of effectiveness in spending, and whether promised employment targets were reached, overall there does seem to be consensus that the program helped protect the nation from sliding into a much deeper depression. To provide a local and national view of the outcomes though we take a look at some recent Houston and national analysis.
Local Houston Area Impact
KTRK-13 News reports on some local initiatives that were launched right here in our area using stimulus support.
National Impact
To suss the national picture out, the new book Money Well Spent, by Michael Grabell offers perhaps the most thorough assessment we and other reviewers have seen thus far. He recently offered a synopsis of his findings in both a February 11th New York Times editorial – “How Not To Revive An Economy“, where he indicated:
“I spent three years reporting on the $840 billion stimulus plan that the Obama administration pushed through Congress in 2009. My conclusion: government can create jobs — it just doesn’t often do it well.
The stimulus — a historic package of tax cuts, safety-net spending, infrastructure projects and green-energy investments — certainly did a lot of good. As the economists Alan S. Blinder and Mark Zandi have noted, it’s one of the key reasons the unemployment rate isn’t in double digits now.
But the stimulus ultimately failed to bring about a strong, sustainable recovery. Money was spread far and wide rather than dedicated to programs with the most bang for the buck. “Shovel-ready” projects, those that would put people to work right away, took too long to break ground. Investments in worthwhile long-term projects, on the other hand, were often rushed to meet arbitrary deadlines, and the resulting shoddy outcomes tarnished the projects’ image.”
(Source: New York Times)
Grabell has also recently appeared for an extensive interview on public radio’s “Fresh Air” program where he provided some interesting analysis on the internal local and state problems for the stimulus programs implementation as well as some reasons why the administration opened itself up to political challenges in its very creation.
For instance when the administrations lead economist made a quick and rosy projection on its impact on the employment rate, that same expert was doing so at the very moment the economy had still yet to bottom-out from the initial impact of the recession. Furthermore, from a vantage point of political calculus, Grabell points out that the administration perhaps too quickly tilted to the Republicans favor adding up to one-third of the stimulus in the form of tax cuts. By not getting Republican buy-in first, by making them fight for those cuts, the opposition was able to allow the cuts to take effect purely with Democratic votes in Congress. Thus never leaving any of their own fingerprints on the other two-thirds of the package they more fundamentally opposed and have been focusing on since in their criticisms.
Yet despite the warts and all analysis, Grabell contends the stimulus did more good then harm. Although, he add, some will always contend the results are too hard to see. In his summation on Fresh Air he offers this with his interviewer Peter Davis:
GRABELL: “So in the recession we lost many millions of more jobs. So we’re still stuck at 9 percent unemployment. But these forecasting firms and economists have said if we didn’t have the stimulus we probably would have peaked at 12 percent unemployment, not 10 percent and still be in double digits today.”
DAVIES: “And it’s interesting that people who criticize the plan, you know, do have numbers and statistics to point to. And I guess one of the problems here is that it’s not so easy to calculate jobs created and saved. What are some of the challenges in getting those numbers?”
GRABELL: “Sure. I think one of the difficulties is that you’ll never be able to get all of the workers in a room and tap hardhats and find out exactly how many people were employed. In addition to the direct, you know, people who were hired directly, they’re all these indirect jobs and induced jobs that were created because someone had more money in their pocket to spend at the supermarket or the mall because, you know, a construction worker got hired and was then able to take his family out to dinner on a Friday night. This depends somewhat on economic modeling and there are, you know, two very different schools of economic thought about how much stock to place in those modeling. So even though these nonpartisan economic forecasting firms are say more than two million jobs, there are some economists on the conservative side who reject those ideas completely and say that it’s really, you know, it’s really voodoo science here, voodoo economics, and you can’t calculate it like that.”
(Source: NPR-Fresh Air)