The Stimulus Worked

Why are we even talking about this?

Of course it worked.

The problem was always that it was too small, not that it might not work.

Still don’t take my word for it. Go read the Congressional Budget Office report for yourselves: CBO Report On The Stimulus

Now there will always be naysayers. Folks who just don’t want to admit they were wrong, or who object to any form of government intervention in the economy. They are ideologically, not analytically driven. The CBO is an independent agency that prides itself on its impartiality. It is where Republicans and Democrats both go to get the score on government activities. So what does the CBO say?

That the stimulus raised second quarter 2010 GDP by somewhere between 1.7% and 4.5%. And that it added between 1.4 million and 3.3 million jobs. And that cut the unemployment rate by between 0.7% and 1.8%.

Those are wide ranges deliberately. The CBO gives ranges so that we can compare the most optimistic and pessimistic analyses side by side.

Take the GDP figures: given that GDP is widely thought to have been around 1.4% in the second quarter, even the worst case analysis the CBo gives us shows that the stimulus was the reason we were not in recession. The best case figure shows that we would have been in a very deep hole without it. Either way the stimulus was a resounding success. The same thought goes for employment and the jobless rate.

So why do the naysayers persist?

They just can’t get round the thought that government policy actually works. They don’t want to admit it. And they think if they repeat themselves enough time the voters won’t get it either.

As for me: I stick with my original thoughts. The stimulus was way too small to kick us into a sustainable growth path. Those who put the plan together underestimated the depth of the recession and the danger of depression. So they trimmed the package as small as they could. Political expediency took precedent over good policy. The administration gave into GOP objections before it even fought for a bigger stimulus.

The result: a good result. But not the right result. We are still teetering on the brink of failure. Plus the economy’s anemic path has jeopardized the Democrat’s chances of keeping in power. For that they have only themselves to blame.

Meanwhile I keep banging the same old drum: we need more stimulus.

Now.