Take a look at the picture above. It's a picture of the variables that are contributing to the recovery: low interest rates, Fed liquidity actions, TARP, stimulus, the auto bailout, housing/foreclosure mitigation and time. It's also a screenshot from an excellent video made by Keith Hennessey, former economic adviser to President Bush, in response to another video shot by the White House.
Hennessey is making two points here. His first point is that we don't know the stimulus "worked" because it coincided with other efforts to help the economy. Roosters don't make the sun rise, etc. His second point is that we shouldn't give the Obama administration too much credit for the recovery because all of the other actions in purple predated the administration (even though most people think Obama passed TARP and the auto bailouts).
As you might suspect, I take issue with some of Hennessey's implications. We can't prove the counter-factual that things would have been worse without the stimulus, but conservatives also can't prove the counter-factual that things would have been better without the stimulus. Since economic growth has returned and jobs have stopped falling dramatically and started growing slowly (and then stopped growing again), it seems to me that the burden of proof should be on conservatives to make better cases for why tax rebates and state aid hurt the economy, as the WSJ often claims.
But my objections are minor. This is a fine piece of explanatory economics, and well worth your time, whether you're a liberal, conservative or just somebody trying to get a handle on the economy and what to think about it.
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