One Year Later, Was the Stimulus Worth It?

An economic success, but a political debacle

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One year after President Obama signed the American Recovery and Reinvestment Act into law, The Washington Post's Alec MacGillis reports that the White House will release its first annual report on the results of the $787 billion stimulus package. Despite the strong consensus among economists on the necessity of the stimulus package to combat the economic recession, the bill's first year has been rough, pockmarked by political controversy over the number of jobs saved, the proper methodology for measuring its effectiveness, and questions over where and to whom the money is going. Despite the immediate benefits of the stimulus package, economists still forecast a long road ahead for the American people.

On the birthday of the stimulus, the White House is making a major push to trumpet the stimulus after a long year of enduring political flak. Anticipating trouble during the 2010 elections, the White House and DNC are struggling to get back on message, airing an ad that portrays Republicans as "hypocrites" for griping about the stimulus while enjoying its success. Even Joe Biden authored a brief defense of the stimulus package in USA Today, praising the incremental successes of the bill and noting that "the best is yet to come."

But in the midst of the White House's perpetual cheerleading, pundits ask: was it all worth it? The answers are mixed. For economists, classical Keynesianism has paid off in spades, but journalists aren't so sure the Obama administration will survive the political attacks to celebrate America's victory over the recession.

  • Success! In a masterful article in The New York Times, David Leonhardt guides readers through the media chatter surrounding the stimulus and get to the economic facts:
Just look at the outside evaluations of the stimulus. Perhaps the best-known economic research firms are IHS Global Insight, Macroeconomic Advisers and Moody' They all estimate that the bill has added 1.6 million to 1.8 million jobs so far and that its ultimate impact will be roughly 2.5 million jobs ...
Yet I'm guessing you don't think of the stimulus bill as a big success. You've read columns (by me, for example) complaining that it should have spent money more quickly. Or you've heard about the phantom ZIP code scandal: the fact that a government Web site mistakenly reported money being spent in nonexistent ZIP codes.
There are two main reasons to think the hard-core skeptics are misguided -- above and beyond those complicated, independent economic analyses. The first is the basic narrative that the data offer ... The second argument in the bill's favor is the history of financial crises. They have wreaked terrible damage on economies ... Yet the jobless rate is now expected to begin falling consistently by the end of this year.
  • Don't Let The Pundits Fool You  Andrew Sullivan reminds readers of the stimulus's positive points while tying its perceived failure to Beltway punditry: "Obama's stimulus did save jobs that would otherwise have been wiped out if the downward spiral had intensified; his unpopular rescuing of the banks did the same, however infuriating helping those bastards was; he restructured the car industry to save countless jobs; he certainly cannot be held responsible for the collapse of the recent jobs package ... the brutal fact is that there is not much Obama can do to avoid the brutal and long hangover from the housing bubble and financial crisis more than he has. And if he had nationalized the banks and doubled the stimulus, the Beltway pundits would doubtless be decrying his lack of centrism on that as well."

  • The Stimulus Is Fine, But The PR Isn't, writes Time's Michael Scherer, addressing Joe Biden's PR push. Scherer writes that while the stimulus has been a comparable success, Americans are still hurting, such that "the crowning legislative achievement of the first year of Obama's presidency is, as Biden predicted, a political disaster:
[Biden] foresaw the public souring on the stimulus, but did not predict the reason. Even as he succeeded in preventing the money from being misspent in any major way--at least as far as we now know--he was unable to prevent the collapse in public confidence. In his report Tuesday to the president, Biden tries to declare victory. "The work you set us out to do a year ago is going well," he writes to Obama. "I want to thank you for the confidence you showed in giving me this important task and I believe that we have served the American people well." In these words, there lies a great irony. Biden may have accomplished his task, but he has still failed in his goal.
How did a package that's helping spur economic growth -- 5.7% last quarter -- turn into something that, at best, is now a wash? Let us count the ways. One problem has been on the communications front. The White House originally sold it as a jobs bill instead of legislation that was going to grow the economy (or at least be a safety net for the freefall), even though jobs are always a lagging indicator ... A second problem has been the politics. How did Dems not take advantage of Republicans who voted against middle-class tax cuts in it? ... Finally, it doesn't help when outgoing Sen. Evan Bayh (D) is saying this, like he did yesterday: "[I]f I could create one job in the private sector by helping to grow a business, that would be one more than Congress has created in the last six months."
  • GOPers Scream Bloody Failure  Mark Halperin at Time provides a breakdown of GOP one-liners on the anniversary of the stimulus bill:
-- Boehner: "It is clear that is has utterly failed."

-- Steele: "Pride truly does cometh before a fall."

-- Palin: "It's been loaded with pork, corporate giveaways, union bosses' goodies, and other manners of waste."
This article is from the archive of our partner The Wire.