The Democrats' Stimulus Failed, for the Democrats



American Crossroads, a conservative PAC, throttles Democratic Senate Majority Leader Harry Reid for the $800 billion stimulus in an ad. Here's the script:

"With Nevada in economic free fall, Harry Reid brags about his taxpayer-funded $787 billion bailout, saying, 'There's no question our hard work is paying off.' Paying off? Paying off for whom? More than 180,000 Nevadans are out of work. Nevada home values have plummeted...record foreclosures. Harry Reid's work is paying off, alright: paying off for Harry Reid's friends in Washington. But leaving Nevada -- with what?"

First, what the ad gets kinda right: it's true that Nevada received comparatively little through the stimulus, because it has a skinny state government and most of the stimulus money was allocated through (and pegged to the needs and size of) state and local government programs.

But the ad is a kind of paradox. How can Harry Reid's stimulus both pay off for Harry Reid and also threaten Harry Reid's reelection? The answer is that the Recovery has not paid off for Harry Reid -- or any of his colleagues in Washington -- at all. Despite numerous accounts of its successes, the Recovery Act has been a critical failure. In one poll, 64% of respondents said the president's economic policies had done nothing (or worse!) to help the economy.

We all know why the stimulus is unpopular. The only thing more garishly high than its price tag is the unemployment rate we're still living with. But as Alan Blinder notes, blaming the stimulus for the state of the economy is like blaming the Yankees' 13-11 loss on the hitters.

This analogy is fun, but insufficient. There's no box score for the economy, no hard account of jobs saved, or demand lifted. So most people looking about the bad economy after the stimulus are like folks who would say, "I heard the Yankees lost 4 games in a row. Their hitters must be really struggling!" Maybe the hitters are struggling. Or maybe they're scoring 7 runs a game and giving up 9.

To be sure, not passing a stimulus might have allowed the economy to sink into an even larger hole, which would have much worse for incumbents. But it's bizarre, even for a crass political ad, to pretend that Washington is high-fiving over the stimulus paying off for their political prospects.

Presented by

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

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