One More Time: The Stimulus Worked

by Jonathan Cohn | August 30, 2011

Republicans and their allies keep saying the Recovery Act didn't work. The experts keep saying that it did. The latest is the Congressional Budget Office, which this week released a new economic projection and, in so doing, confirmed its earlier finding that the Recovery Act succeed in its primary goal: Saving or creating jobs in order to offset the effects of the recession.

As of June, the agency says, between 1.0 and 2.9 million more people are working because of the Recovery Act. And that figure actually seems to understates the impact.

Not only did more people find jobs; more people who had jobs worked additional hours. Throwing those additional hours into the mix, CBO determined that the Recovery Act's net impact was the equivalent of between 1.4 and 4.0 million additional full-time jobs. 

The Obama Administration had predicted the Recovery Act would create 3.5 million jobs, which is towards the upper boundary of the CBO's estimates but certainly within its range. It's also roughly consistent with projections from other authorities. The problem with the Recovery Act was that it needed to be even larger, and create or save even more jobs, because the recession was so deep.

In an ideal world, these findings would matter. The Republicans and other Recovery Act critics would stop calling the law a failure while the public would realize that conventional, Keyensian stimulus actually boosts employment. And that would create political support to enact another stimulus, one large enough to increase growth to the point where the economy was adding significantly more jobs.

Of course, we don't live in an ideal world. But a guy can dream.

Source URL: http://www.newrepublic.com//blog/jonathan-cohn/94367/one-more-time-the-stimulus-worked