Debate Still Hot on First Anniversary of Stimulus Package

WASHINGTON (Feb. 17) -- On the one-year anniversary of the enactment of the economic stimulus package, the debate rages on: Has it worked?

On Capitol Hill, the responses break along traditional party lines. Republicans say the program failed, pointing to an unemployment rate that is significantly higher than when the bill was signed. Democrats and the Barack Obama administration argue that the stimulus has succeeded in creating or saving 2.5 million jobs (so far) and, just as crucially, in preventing a steep recession from spiraling into another Great Depression.

Yet amid the political back-and-forth, a consensus is emerging among economists that the stimulus -- officially the American Recovery and Reinvestment Act -- has in fact been effective. Economic research firms like IHS Global Insight, Macroeconomic Advisers and Moody's have each estimated that the bill has created between 1.6 million and 1.8 million jobs to date, The New York Times reports.

Here's a rundown of political and economic opinion on the stimulus, one year later.

Smashing Success

The Obama administration has used the first anniversary to launch a PR blitz touting the benefits of the stimulus and rebutting critics of the bill. The move is a recognition that the recovery act has become unpopular for many voters, who are struggling to square the huge government spending with the fact that unemployment rose throughout 2009.

"One year later, it is largely thanks to the recovery act that a second depression is no longer a possibility," Obama said today at a White House event. Citing economic reports, the president said about 2 million people now hold jobs they wouldn't have without the stimulus package.

Still, Obama tried to temper what he suggested were unreasonable expectations for the legislation. "The truth is, the recovery act was never intended to save every job or restore our economy to full strength," he said.

Vice President Joseph Biden added, "Without any question, the recovery act is working. It's working well, and maybe even most importantly, it's working toward something."

Effective

Economics columnist David Leonhardt writes in The New York Times today that "the stimulus package, flaws and all, deserves a big heaping of credit." He quoted Global Insight's chief economist, Nariman Behravesh, as saying, "It prevented things from getting much worse than they otherwise would have been. I think everyone would have to acknowledge that's a good thing."

The Congressional Budget Office has also credited the stimulus with helping to end the recession by contributing to positive economic growth.

Insufficient

Nobel Prize-winning economist Joseph Stiglitz has criticized the stimulus from its inception as insufficiently large to jolt the economy, and he has stuck to that assessment as the program has been implemented. In an op/ed in the New York Daily News late last month, Stiglitz said Obama's economic policies "have made a difference. Were it not for his stimulus package, the unemployment rate would be higher, and there would be even more foreclosures." But he quickly added that the administration "underestimated the severity of the downturn."

"As a result," Stiglitz wrote, "the stimulus program was too small." Other liberal economists, including former Labor Secretary Robert Reich, say the same. Reich last week wrote on his blog that the stimulus "is not likely to be enough to make up for the shortfall in private spending." Obama, he said, "needs to spend more."

Complete Failure

Republicans tell a different story. House GOP leader John Boehner of Ohio released a 37-page report titled "Where Are the Jobs?" and said, "Today's anniversary of the Democrats' trillion-dollar 'stimulus' marks one year of broken promises, bloated government and wasteful spending.

"The majority promised that under their 'stimulus,' unemployment would not exceed 8 percent and job creation would begin 'almost immediately,'" Boehner continued. "But since President Obama signed it into law, more than 3 million Americans have lost their jobs, unemployment is near 10 percent and the deficit is set to hit a record $1.6 trillion."

Republican National Committee Chairman Michael Steele offered a reminder that the administration had said the stimulus would keep the unemployment rate under 8 percent. In an op/ed on The Daily Caller, Steele wrote that Obama's "binge spending agenda sets the stage for the type of economic stagnation that would make even Jimmy Carter blush."