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Stimulus is Not a Four Letter Word

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I’ll let you on a little secret about what goes on here in Washington and reveal how policy wonks in Washington really have fun. (And, no, since this is a family friendly column, we’ll leave the likes of Anthony Weiner and his ilk aside for the moment.)

The hot game inside the Beltway is for economists, journalists, and other assorted scribblers coming up with yet more proof that the 2009 economic stimulus plan actually worked.  It’s like the egghead equivalent of tic-tac-toe around here. It really is. The Congressional Budget Office, as well as Moody’s chief economist Mark Zandi and Princeton economist Alan Blinder have all gotten their cracks at it.

And everyone here eventually gets his or her turn. The latest player is policy analyst Michael Linden, who has cleverly turned stimulus opponent Douglas Holtz-Eakin’s own methology against him to prove, yet again, that despite all the tea party bluster, the stimulus did indeed create millions of jobs and add growth to the American economy when it needed it the most.

The problem is that while all of this stimulus-proving has been great fun for us in the capital, few of us have been getting the rest of the country in on the game. That includes, most importantly, President Obama. Which is odd, because, he helped drive the stimulus in the first place. And when the president does sometimes dare mention his stimulus, as he did at a press conference last month, he lumps it in with the Bush tax cuts and paying for war, sounding like he kind of regrets it in a way.

That relative silence and timidity on the subject has allowed tea partyers, conservatives and other opponents to denigrate the stimulus either as a failure, “socialism,” or both. Allowing the stimulus to be mislabeled in this way now poses a great danger as the country now is teetering back on recession, and needs more, not less, stimulus.

The problem, as the nation knows, is rampant unemployment. We need to create jobs, lots of them. Lately, the president has been talking more about patent reform and new free-trade agreements as job-creators. While such measures may create jobs, they will come perhaps years down the road at a time when we need to put people to work today. The only way we can do that is more stimulus. Americans, by roughly a 2-to-1 margin, say unemployment as a problem is even bigger than the national deficit and debt. 

Naysayers, of course, will say more stimulus is a lost cause. There’s no way the Republicans would let it pass Congress, they argue. As things stand, that’s probably true. That’s why President Obama has to climb aboard Air Force One and get onto his bus tours, and start hauling on stage with him some of those millions of ordinary Americans who have jobs today thanks to the stimulus plan, and let them tell their stories.

Particularly, the president has to parachute into the districts of all of the hypocritical Republicans who slam stimulus on the one hand, but put their hands out for its cash on the other. Republicans like Rep. Michele Bachmann, who criticizes the stimulus as an “orgy of spending” out on the campaign trail, but at the same time requests stimulus dollars to create 1,500 jobs for something called the Big Lake Rail Park in her Minnesota district .

Bachmann isn’t alone. Conservative Sen. Jeff Sessions of Alabama also wanted his turn at the stimulus, for cash to help an ethanol plant in his state, to create 750 jobs. And there are many others, too. President Obama needs to criss-cross the country, exposing these Republican frauds and liars, helping the citizens in their states and districts tell fellow Americans how the stimulus has helped. The president has to do this as long as it takes until voters not only are asking for new stimulus, but are demanding it.

About Scott Nance

  • cindy

    The four letter word is DEBT! The stimulus didn’t WORK and was an EPIC FAIL! It did not create JOBS! Excuse while I wash my mouth out with soap for spouting all of these four letter words associated with this administration….

  • http://www.thewashingtoncurrent.com Scott Nance

    Cindy,

    Quite the opposite is actually true. Mark Zandi, an economist who was a top adviser to John McCain’s 2008 presidential campaign co-authored a paper which says: “the effects of the fiscal stimulus alone appear very substantial, raising 2010 real GDP by about 3.4%, holding the unemployment rate about 1½ percentage points lower, and adding almost 2.7 million jobs to U.S. payrolls.”

  • cindy

    any federal spending is temporary boost, what you need is to HIDE economy ahead of 2012 election. Stimulus was filled with CRAP, even corporate jet tax breaks. Why did Jay Carney say “The White House doesn’t create JOBS” POTUS citing Congress for not creating JOBS, yet we taxpayers are paying for his Midwest JOBS TOUR???? All stimulus will do is create more DEBT, we need solutions, not stimulus….

  • http://blogcritics.org/writers/dr-dreadful/ Dr Dreadful

    Scott, don’t be cruel. You’re troubling people’s worldview with actual facts. How dare you!

  • cindy

    There are many economist that agree with Stimulus being a FLOP, because you say this one economist backs the Stimulus doesn’t provide evidence. FACT is we see it did nothing for the economy. Maybe made it worse by adding to the debt. Not a personal attack but turning quote relevant to today’s terms…It is the DEBT, stupid. S&P cited we needed to cut 4 trillion, Little Timmy said No RISK of Downgrade, They want to blame everyone but the people who are driving this bus! It is time for America to get REAL. The BULL isn’t working anymore.

  • http://blogcritics.org/writers/dr-dreadful/ Dr Dreadful

    because you say this one economist backs the Stimulus doesn’t provide evidence.

    Cindy, Scott provided several citations, not just one, to economists and analysts who say the stimulus worked. Did you actually read the article?

  • cindy

    Facts are a stubborn thing and this POTUS now has a record…of failing to preserve the economic stability of what used to be the World’s largest economy. We face further downgrades, loss of the dollar as world currency, inflation, more job losses, and frankly depression…Doubling DOWN on the policies that got us here…shameful…

  • cindy

    NABE conducted the study by polling 68 of its members who work in economic roles at private-sector firms. About 73% of those surveyed said employment at their company is neither higher nor lower as a result of the $787 billion Recovery Act.

  • cindy

    Integrity or loss thereof is a real shame, and without it there are no real solutions. Spin does nothing but keep us from real solutions, whether you are on the right or left.

  • cindy

    I urge anyone in the mainstream or left Media to challenge this admin, because only then will you see that you are not truly allowed an opinion. This is the worst since Nixon as far as media protection. There is a hole in the bucket of the water you carry, and that is obvious to most. Journalism used to be a revered profession, getting to answers, getting to truth, now we predict what you will say as if it were in the DNC playbook.

  • Baronius

    Other economists have demonstrated just as effectively that the stimulus didn’t work. The consensus, however, is that it’s impossible to determine the stimulus’s effect to any standard of proof.

  • http://blogcritics.org/writers/dr-dreadful/ Dr Dreadful

    Principally, I suspect, because there are no agreed criteria for what would qualify as the stimulus having “worked”.

  • http://blogcritics.org/writers/dr-dreadful/ Dr Dreadful

    And whether it “worked” or not, I do think there’s a case for questioning the targeting of some of the funds. In the city I live in, for example, ARRA money was used to resurface one of the busiest main streets – that was already in pretty good condition and in fact had last been resurfaced only a couple of years previously.

  • http://blogcritics.org/writers/dr-dreadful/ Dr Dreadful

    How’s that for the “DNC playbook”, Cindy?

  • cindy

    wow…i expected to be hit with denials and personal criticism…there is a long list of stimulus misuse—turtle crossings and so on. @Dr…thank you, it gives me hope that we may have a brighter tomorrow, that whether you are democrat or repub, you have the ability to agree or disagree for the betterment of this country. That used to make this country strong, now it seems to divide. Our country is in serious trouble, we need common solutions.Cut spending… Bush was overspending at 1.6 billion a day, why now Obama can spend at 4.1 trillion a day in a worsened economy? We can’t keep going down this path and not sure we have until 2012 to fix it. Most Dems say…Tax the rich!….but then what? You could take everything from the rich and not pay down the debt or continue the current spending….It is time we put Country first….we can’t afford our current path. We can keep pointing fingers or step up for solutions…

  • cindy

    correction to above post–obama spending 4.1 billion, guess i had trillion on the brain…

  • jon

    Stimulus didn’t work plain and simple, economy still screwed, unemployement still high. Those are the facts.

  • Igor

    One CAN read the CBO report, which is easily available at several stages on the CBO website. Here´s the latest (AFAIK) blog entry: CBO blog.

    Here are some quotes:

    Looking at recorded spending to date along with estimates of the other effects of ARRA on spending and revenues, CBO has estimated the law’s impact on employment and economic output using evidence about the effects of previous similar policies and drawing on various mathematical models that represent the workings of the economy. Because those sources indicate a wide range of possible effects, CBO provides high and low estimates of the likely impact, aiming to encompass most economists’ views about the effects of different policies. On that basis, CBO estimates that ARRA’s policies had the following effects in the first quarter of calendar year 2011:

  • Baronius

    Igor, I don’t know where you were going with that comment, but don’t try to cut-and-paste anything with a “-” in it onto BC. You’ll get a break. Paste it into the comment box, then delete all the minus signs and retype them. I don’t know if that’s what went wrong, but I wouldn’t be surprised.

  • Kenn Jacobine

    There is a basic misunderstanding of how the economy actually works. The stimulus represented more of the same policies that were perpetuated in the 2000s under George W. Bush. We’ve had low interest rates and increased government spending since the crisis began in 2008. All we have accomplished in doing is re-inflating the economic bubble. Instead of dot.coms and housing, this time it is the stock market and treasury bills. In other words it is another phony boom built by the Fed and the fiscal policies of the government. This too will crash. If Obama’s stimulus created two million jobs it will only be temporary. For the economy to truly recover the government must get out of re-inflating the phony prosperity and let the economy liquidate all the mal-investment built during the Bush years. For more information on the Austrian Business Cycle Theory read Rothbard, Hazlitt, and Mises.

  • Igor

    Oops. Something cutoff the bullet points.

    They raised real (inflation-adjusted) gross domestic product by between 1.1 percent and 3.1 percent,

    Lowered the unemployment rate by between 0.6 percentage points and 1.8 percentage points,

    Increased the number of people employed by between 1.2 million and 3.3 million, and

    Increased the number of full-time-equivalent (FTE) jobs by 1.6 million to 4.6 million compared with what would have occurred otherwise. (Increases in FTE jobs include shifts from part-time to full-time work or overtime and are thus generally larger than increases in the number of employed workers).

    The BC user experience is really crap.

    I read those guys: Rothbard, von mises, etc. Dry as dust and thick. Schumpeter is better, almost as if he really knew something about relaxation oscillations.

  • Baronius

    Igor – Did you read the report, though? Look at the section about multipliers, which measure the effects of stimulus spending. There’s a huge range in the expected effects – and even the most “successful” policy had a low-end estimate of 1.0, which is to say that it will have zero long-term effect. The other policies had lower low-ends. So again, we’re back to economists not being able to say if the stimulus worked.

  • Igor

    Citation, please, Baronius? Lot of material available!

    Multiplier of 1 means linear effect, not no effect.

  • Baronius

    Citation: the second link in Scott’s article (if the link takes you to pictures of penises, go to the next link). A multiplier of 1 sounds like a 100% gain, until you realize that you have to pay 100% of it back. Then the long-term total economic impact is zero. Of course, the short-term gains may be enough to provide incentive for the temporal transfer of wealth. There may also be plans whose positive impact is so small that the current gains simply cannot justify the future payments.

  • Cannonshop

    What is the tool by which you measure the effectiveness of a study, method, or solution?

    Prominent Economists claimed that we needed the Stimulus to stave off 8% unemployment-well, we’re over eleven when you count the people who’ve been dropped off hte unemployment rolls and aren’t counted in official figures anymore.

    The response from those same economists is, basically, excuse-making. “It would’ve been worse!” they say…

    But would it?

    The figures and multipliers are based on assumptions within a framework, the formulae used failed to provide an accurate outcome, and the response to that failure is making excuses…so maybe, just maybe, the model being used is dead wrong.