Obama Must Defend Stimulus in State of the Union

The knock on Obama since the Republican upset in Massachusetts is that he pursued health care reform in 2009 to the exclusion of job stimulus. I don't get it. The government passed a $800 billion stimulus plan over wide Republican opposition and bailed out Detroit for $50 billion (not to mention the Federal Reserve's trillions of dollars spent buying mortgages and bad assets and bringing interest rates down near zero). That doesn't sound like excluding job stimulus to me.

Moreover, it turns out that Americans don't like the way Obama focused on job creation. There's a new CNN poll (via Chris Good) finding that 75% of the American people think at least half of the stimulus money was an utter waste. Even though I think this is wrong, I understand where the anger is coming from.

First let's look at what the stimulus actually does. The bill has a lot of items, but 40 percent of the ARRA went to something Americans tend to like a lot: Tax cuts -- about $250 billion for individuals and $35 billion for businesses. Another big category was about $180 billion of state aid to avoid deficits that would have resulted in hundreds of thousands of job losses. Another $100 billion went to education. Another $70 billion extended unemployment insurance and health care for recently laid off workers. The overall goal of the stimulus might have been to juice production, but much of it went to give Americans more money to spend, and give states more money to maintain payrolls.

There is a lot of generalized anger in this country. Many Americans are juxtaposing the high unemployment rate, frustrating health care reform process and bank profit headlines and concluding: Obama ignored jobs. They're telling pollsters things like "the stimulus was a waste" and also, "unemployment is too high for government inaction." The message seems to be: The stimulus was a waste, we need more stimulus! Obama has to respond to that anger, even if he thinks it's confused. He needs to remind Americans where the stimulus money went, how future stimulus spending will target joblessness even more exactly, and why health care reform fits into the narrative of our long term economic recovery.

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

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