Is stimulus plan working? The arguments pro and con.
A white House report released Wednesday said the stimulus plan has saved or created as many as 3.6 million jobs. But polls show Americans are skeptical.
(Page 2 of 2)
Counter: No, it doesn't. The CEA says its estimates are reasonable, based on modeling the economy or on comparing reality with a projection of what would have occurred without stimulus. The report shows that White House estimates of the "multiplier" effect – the way that a new dollar of federal spending affects wider economic activity – are similar to what many private-sector forecasters say.Skip to next paragraph
Subscribe Today to the Monitor
Criticism: The job market hasn't improved. Republicans point to the overall decline in jobs – some 3.3 million have been lost in the private sector – since Mr. Obama signed the Recovery Act in February 2009. Congressman Brady and other stimulus-bashers also say the Obama administration back then was forecasting that passing the act would keep the jobless rate from rising beyond 8 percent. Instead, it rose to 10 percent and remains nearly that high, with minimal private-sector job growth in the most recent month.
Counter: Yes, it has. Ms. Romer says the job market turned out to be much worse than she and other forecasters realized early in 2009, for reasons that had nothing to do with the Recovery Act. Without the act, she argues, the job picture would be even worse. And although the nation's overall stock of jobs stands below where it was at the start of 2009, the monthly trajectory has improved significantly – with steep losses graduallly diminishing and then turning into monthly gains as the calendar ticked into 2010.
Criticism: The stimulus is too big. If foes of the Recovery Act are right that it's not helping the economy, this argument would seem to makes sense. After all, the $787 billion act is adding mightily to the national debt at a time when that debt is already high, and when federal deficits appear untamed. And ultimately, the advocates of this view say jobs come from the private sector, not the government.
Counter: The amount of stimulus may actually be too small. Supporters of stimulus agree that federal deficits will need to be curbed in the long run – perhaps even starting within a couple of years. But they say the recession left a huge hole in economic demand – as unemployment, pay cuts, and lost wealth caused consumer spending to retrench.
Although Romer's report called the act the "boldest" stimulus effort in US history, a sizable portion of the money won't be spent by the end of this year. And some $68 billion of the money goes to patching the "alternative minimum tax" (AMT) – something Congress presumably would have done even if there were no recession. Moreover, though the Recovery Act adds to federal spending, it comes as state governments are cutting their budgets.
So goes the stimulus and jobs debate. With fall congressional elections drawing closer, voters will soon get to render their own verdict.
- Obama's triumphs are also his weaknesses: Health care, stimulus, financial reform
- Blog: The stimulus hasn't fixed the economy. What will?
- New Obama-backed stimulus package fails in Senate vote