News Flash: Stimulus Worked

by Stuart Shapiro

Well it’s not exactly a news flash since many economists have been saying this for months.  But a new Congressional Budget Office report gives a new basis of support for stimulus supporters.

The massive U.S. stimulus package, widely viewed by voters to be ineffective, put 1.4 million to 3.6 million people to work between July and September, the nonpartisan Congressional Budget Office said Wednesday.The American Recovery and Reinvestment Act also boosted national output by between 1.4 percent and 4.1 percent during that period, CBO said in its latest estimate.

So why has the stimulus been such a political failure.  I see three reasons.  First, President Obama’s team foolishly claimed that the stimulus would keep unemplyment below 8 percent.  Second, my guess is that very few of the 1.4-3.6 million people who are working because of the stimulus realize that it was the stimulus that allowed them to get or keep their job.   Third, the people who opposed the stimulus have been saying it failed loudly and repeatedly (more loudly and repeatedly than those who trumpeted its success).  And if you hear something enough times, you start to believe it.

By: Stuart Shapiro

Stuart is a professor and the Director of the Public Policy
program at the Bloustein School of Planning and Public Policy at Rutgers
University. He teaches economics and cost-benefit analysis and studies
regulation in the United States at both the federal and state levels.
Prior to coming to Rutgers, Stuart worked for five years at the Office
of Management and Budget in Washington under Presidents Clinton and
George W. Bush.