How Should We Judge Obama's Stimulus?

by Conor Clarke

Columnist-in-Chief Barack Obama took to the pages of yesterday's Washington Post to defend his stimulus spending:

It was, from the start, a two-year program, and it will steadily save and create jobs as it ramps up over this summer and fall. We must let it work the way it's supposed to, with the understanding that in any recession, unemployment tends to recover more slowly than other measures of economic activity.

Keith Hennessey, director of the National Economic Council in the Bush White House (the position now occupied by Larry Summers), has an almost almost syllable-by-syllable response here. But while I enjoy Hennessey's blog and admire the freakish exhaustiveness, this paragraph really rubbed me the wrong way:

This did not have to be a two-year program. Congress could have front-loaded the stimulus had they instead given the cash directly to the American people, as they did on a bipartisan basis in early 2008. [...] Instead the President handed the money and program design over to a Congress of his own party, who saw it as a big honey pot rather than as an exercise in macroeconomic fiscal policy. The President’s primary macroeconomic policy mistake was allowing Congress to pervert a rapid Keynesian stimulus into a slow-spending interest-based binge.

That's not quite how I remember it. What I remember is that before any congressional bill was on the table, the administration released a metrics report (PDF) on what the stimulus should contain. The report argued that any recovery bill should "spend out at least 75% of its total commitment within the first 18 months after passage" -- ie, in the remainder of the next two fiscal years. When the Congressional Budget Office scored the final version of the bill, it reported that 74.2251% of the money would be spent in this two-year period.

Now I suppose Hennessey might say a couple of things about this. He might argue that 75% was never fast enough. (Did he say so at the time?) Or, Hennessey might argue that 75% is fast enough but not happening. (I find that possible but presumptuous, since it's been just five months since the bill become law, and by some standards the spending is ahead of schedule.) Or, he might say that the 0.7749% difference between the president's promise and the CBO's score constitutes the administration's "primary macroeconomic policy mistake." Or, he might not.

What I suspect is happening is an attempt to shift the stimulus goalposts. The administration does this too, of course. Or at least it's being a bit slipperly with it's claim that the stimulus will "create or save" 3.5 million jobs -- a laughable standard that is totally untestable without a time machine and a large appetite for fiddling with historical counterfactuals. But whether 75% of the bill is spent in the next two years is something that's easy to measure. We may as well do it honestly.