David Leonhardt on Economic Recovery

Not every columnist can claim to have had their work personally tweeted by the White House Press Secretary. New York Times economic columnist David Leonhardt became the darling of the White House today for his column on President Obama's one-year-old stimulus act. (ABC News reporter Jake Tapper says White House officials emailed it to him "787 billion times" today.) In addition to portraying the politically beleaguered stimulus as a booming success, Leonhardt provoked deep and intelligent debate on the act's economic and political significance.

Rather than simply explaining why he believes the stimulus was so successful (estimates say it's "added 1.6 million to 1.8 million jobs so far and that its ultimate impact will be roughly 2.5 million jobs"), Leonhardt explores the fierce political debate that has surrounded the stimulus for over a year, without himself engaging in the partisan blame-slinging.

The reasons for the stimulus’s middling popularity aren’t a mystery. The unemployment rate remains near 10 percent, and many families are struggling. Saying that things could have been even worse doesn’t exactly inspire. Liberals don’t like the stimulus because they wish it were bigger. Republicans don’t like it because it’s a Democratic program. The Obama administration hurt the bill’s popularity by making too rosy an economic forecast upon taking office. [...]

Even if the conventional wisdom is understandable, however, it has consequences. Because the economy is still a long way from being healthy, members of Congress are now debating another, smaller stimulus bill. (They’re calling it a "jobs bill," seeing stimulus as a dirty word.) The logical thing to do would be to examine what worked and what didn’t in last year’s bill. But that’s not what is happening. Instead, the debate is largely disconnected from the huge stimulus experiment we just ran.

Leonhardt, rather than pointing fingers or making chest-thumping boasts, quickly moves on to how he thinks we should proceed.

So what now? The last year has shown — just as economists have long said — that aid to states and cities may be the single most effective form of stimulus. Unlike road- or bridge-building, it can happen in a matter of weeks. And unlike tax cuts, state and local aid never languishes in a household’s savings account.

The ideal follow-up stimulus would start with that aid. It would then add on extended jobless benefits, which also tend to be spent, as well as tax credits carefully drafted to get businesses to hire and households to spend, like the cash-for-clunkers program.