The stimulus, one year later

Our view: Neither failure nor miracle, federal spending bill cushioned the fall

February 19, 2010

This week's anniversary of President Barack Obama's stimulus package has provided yet another episode of that never-ending TV series: "Extreme Partisanship, Washington Edition." Democrats have hailed the spending as the country's economic savior, and Republicans mock it for failing to stop job losses while adding $862 billion to the deficit.

The truth is less exciting. What the stimulus has provided was a modest and temporary cushion against the economic downturn. Administration claims that the effort will have saved or created 3.5 million jobs in its two-year window are, as most economists have concluded, on target.

That those gains are hardly noticeable given the nation's overall job losses -- about 8.4 million fewer since the recession began more than two years ago -- may be a political misfortune for the Democrats but should come as no real surprise. The country's economy is far too big to have expected a one-time boost in government spending to have accomplished anything more.

What's genuinely alarming, however, is the extent to which the public does not perceive this success. A recent CBS News/New York Times poll found just 6 percent of Americans believe that stimulus spending has created jobs. Other public opinion surveys have produced similar results.

One can chastise the stimulus plan for being too small. Complaints over waste or spending priorities are valid, too. But when government spends billions of dollars on roads, bridges, public transit, energy conservation, tax credits, aid to states, etc., there's hiring involved. It's inescapable.

Where the White House has failed miserably is in demonstrating these benefits to a highly skeptical public. Admittedly, that was no easy task, special Web site or no. It's a bit like telling employees that a wage freeze rather than a layoff is a happy outcome -- their gratitude is bound to be muted by their economic reality. Still, it's outrageous that the stimulus package is being seen as the cause of the nation's deficit woes. As President Obama reminded House Republicans in Baltimore last month, he came in with $8 trillion in debt and an economy teetering on the brink of disaster.

Given that the federal government was running a budget surplus in 2000, it's unfair to characterize the deficit as anything other than a hangover from the excesses of the Bush administration -- with much of the most ruinous budget choices from tax cuts for the wealthy and a record expansion of Medicaid that was never paid for endorsed by a then-Republican Congress.

What if there had been no stimulus package? Perhaps the biggest impact would have been on state budgets. While states continue to struggle with falling tax revenues and projected deficits, their fiscal situation would be truly disastrous if the federal government had not stepped in.

In Maryland alone, it's estimated that nearly 20,000 jobs have been saved or created. Without the stimulus, there would have been far deeper cuts in education and health care this past year, hundreds of layoffs including teachers and police officers, a widened gap in the social safety net and disaster for the already-struggling construction trades.

It may not be human nature to celebrate a disaster being made less disastrous, but the stimulus has proven to be the air bag on this particular economic crash. All the better that with billions of dollars still to be invested, this under-appreciated asset still has more to give.

Readers respond

The stimulus wasn't a total failure, but it's also not the success you or the administration touts it to be. Start off with the fact that saved jobs is an unprovable estimate. Next, what happens when the states have to go without the aid they received from the stimulus?

What no one wants to admit is the government can't spend its way out of the economic doldrums, either as Bush did or Obama is doing. We are spending too much money we don't have, and sooner or later it has to be paid back. The only question is, do we wait until the bottom falls out to realize it?

Rino

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