One of the first moves of the Obama administration was a $787 billion government stimulus in early 2009 to prop up an ailing economy. Many conservatives these days are focused on reining in government spending — and this undoubtedly will be a talking point in the days to come as GOP candidates and the president hunker down for Election Day 2012.
Was the stimulus just one more Washington boondoggle — a handout to special interests that wasted taxpayer money when we already are up to our eyeballs in debt? Or was it a crucial intervention in a time of great need that helped prevent a recession from turning into a depression or worse?
The nonpartisan Congressional Budget Office has just come out with its report on the American Reinvestment and Recovery Act (referred to in the document as ARRA in typical beltway affection for acronyms and jargon). And its findings on the real impact of the stimulus package are worth noting:
Real Deficit Impact Is 5% Higher: The CBO estimates the total deficit impact of the spending actually will be $825 billion. That’s a roughly 5% increase over that headline $787 billion price tag initially reported.
The Money Already Is Spent: But more importantly, “close to half of that (deficit) impact occurred in fiscal year 2010, and about 85 percent of ARRA’s budgetary impact was realized by the end of June 2011.” In short, lest politicians tell you otherwise, the horse has left the barn.
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Number of Jobs “Created” Is Slippery: The CBO gives the GOP fodder for criticism of the stimulus, admitting some jobs “might have existed even without the stimulus package, with employees working on the same activities or other activities.” Then again, the office also gives Obama wiggle room by saying jobs estimates “do not attempt to measure the number of jobs that were created or retained indirectly as a result of recipients’ increased income, and the increased income of their employees.” That means pinning down a hard figure for jobs created on this is less about facts and more about finding the right statistics to make your argument.
Cost Per Job Between $196,750 and $562,000: Like I said, the jobs numbers are slippery. But if you take the $787 billion price tag and divide by CBO estimates of 1.4 million to 4 million “full-time equivalent” jobs created as a result of the stimulus measure, per-job costs range between these two six-figure sums.
Stimulus Had Substantive GDP Impact: Perhaps the rosiest news is that the impact of the stimulus package “raised real (inflation-adjusted) gross domestic product (GDP) by between 0.8% and 2.5%.” That’s no mean feat for a nearly $15 trillion economy. Then again, the fact is the U.S. is slogging it out. Unfortunately, a report last week indicated the U.S. economy currently is growing at a 1% annualized rate, so we are far from in the middle of an economic recovery, let alone an economic boom. Still, it makes you wonder how bad things would have been without that crutch over the past two years. Also makes you wonder if we still are in a recession even if we haven’t met the textbook definition of declining GDP for two consecutive quarters.