Tim Pawlenty is Right About the Stimulus. Kind Of.

More

Minnesota Gov. Tim Pawlenty, widely considered a major contender for the 2012 Republican presidential nomination, said it would be "ludicrous" to claim that the stimulus is "what pivoted" the economy, according to Bloomberg. He's absolutely right! With barely 15 percent of the $787 billion bill spent, that would be a bold claim indeed. I'd like to know who's making it.


It's one thing to say that the stimulus is helping -- even Pawlenty's economic development director is saying that. It's quite another to argue that, out of more than $2 trillion spent on bailing out our financial system, auto system, states and so on, the key fulcrum was $81 billion of stimulus spending. Arguing that four percent of the administration's economic rescue plan didn't single-handedly "pivot" the economy is setting up a pretty flimsy strawman. It also doesn't obviate a stimulus package that will spend the most of its money in the next twelve to fifteen months.

The fact is, it's way to early to start talking about the stimulating effects of the stimulus, since much of the early money has gone to bolster state budgets. Early GAO reports of stimulus spending (see graph below) found most of the money going to Medicaid and plugging holes in state budgets. In other words, it gave states a crutch when their budgets were falling apart. Indeed, of the $1.7 billion spent or committed in Minnesota, according to Pro Publica, $1 billion has gone to bolstering Medicaid or the State Fiscal Stabilization Fund. If Pawlenty considers that wasteful, then he should say so specifically. Running against Medicaid and state fiscal aid might not be popular, but at least it would be intellectually honest for a stimulus critic.
stimulusbreakdown.png

Jump to comments
Presented by

Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

Get Today's Top Stories in Your Inbox (preview)

A Wild Vacation in the Pacific Northwest

A not-so-ordinary road trip, featuring extra-tall art bikes, skateboards, and hand-painted vans


Elsewhere on the web

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register. blog comments powered by Disqus

Video

Adventures in Legal Weed

Colorado is now well into its first year as the first state to legalize recreational marijuana. How's it going? James Hamblin visits Aspen.

Video

What Makes a Story Great?

The storytellers behind House of CardsandThis American Life reflect on the creative process.

Video

Tracing Sriracha's Origin to Thailand

Ever wonder how the wildly popular hot sauce got its name? It all started in Si Racha.

Video

Where Confiscated Wildlife Ends Up

A government facility outside of Denver houses more than a million products of the illegal wildlife trade, from tigers and bears to bald eagles.

Video

Is Wine Healthy?

James Hamblin prepares to impress his date with knowledge about the health benefits of wine.

Video

The World's Largest Balloon Festival

Nine days, more than 700 balloons, and a whole lot of hot air

Writers

Up
Down

More in Business

Just In