The Recovery Act, often known as the stimulus, was the first major act of active government in at least decade. After the unmitigated failure of conservatism, the stimulus has likely be viewed by many voters as a test of whether active government can work and should be used more often.
The evidence is in. The stimulus is working. And we need more of it.
The Congressional Budget Office released yesterday its updated estimates of the Recovery Act’s impact on the economy:
…CBO estimates that [the Recovery Act's] policies had the following effects in the second quarter of calendar year 2010:
* They raised real (inflation-adjusted) gross domestic product ( GDP ) by between 1.7 percent and 4.5 percent,
* Lowered the unemployment rate by between 0.7 percentage points and 1.8 percentage points,
* Increased the number of people employed by between 1.4 million and 3.3 million, and
*Increased the number of full-time-equivalent jobs by 2.0 million to 4.8 million compared with what would have occurred otherwise…
More growth and more jobs with the stimulus than without. Period.
This is not the first scrap of evidence proving the stimulus is working. It is not an outlier report against a tide of opposing conclusions. It’s merely the latest confirmation of what we already knew.
The New York Times reported back in November that most economists found the stimulus to be helping the economy.
Last month, leading economists Mark Zandi and Alan Blinder released a report titled “How the Great Recession Was Brought to an End,” finding that the stimulus, along with the TARP program, helped end of the recession. Similar to the CBO’s findings, Zandi and Blinder concluded: “…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.”
Conservatives argue that: the economy is still struggling, therefore the stimulus didn’t work. That is an argument not based on any serious, objective economic analysis, and should be dismissed.
Yes, the economy is still struggling, but we know the stimulus helped us from an even worse economy. Therefore, the only logical next step to take is do more of what is in the Recovery Act.
More active government.
More investment to modernize our infrastructure, more support for renewable energy, more aid to fiscally strapped states, more funds for anti-poverty programs, extend the tax cuts for the middle-class and increase our short-term budget deficit so our government puts more into the economy than it takes out.
Unfortunately, as I wrote here recently, 41 Republican and 12 Democratic Senators are refusing to accept this economic reality and have turned off the stimulus spigot.
As you can see above, they have no case to make.
But none will admit to that before the November elections, and more anti-stimulus deficit hysterics are likely to join Congress in January.
Our only hope to avoid a feeble recovery is for Congress to treat the need for more stimulus as an emergency and take action in any post-election session this December.
We have the facts squarely on our side that active government can work and is working. But as is often the case, that is not enough.