CBO Destroyed GOP Lies about Obama Stimulus Program
As their recent disinformation campaign over mythical Obamacare job losses shows, Republicans love the nonpartisan Congressional Budget Office. Except when they hate the CBO, which is most of the time. After all, GOP leaders are using the fifth anniversary of the $787 billion Obama economic stimulus program to mark it is a failure despite the fact that the CBO--and most other analysts--long ago declared it a success.
Delivering the GOP's President Day's message echoed by Senators Mitch McConnell (R-KY) and John Cornyn (R-TX), Republican White House hopeful Marco Rubio denounced the American Recovery and Reinvestment Act (ARRA) in a new video released Monday morning:
"If you recall five years ago, the notion was that if the government spent all this money--that, by the way, was borrowed--that somehow the economy would begin to grow and create jobs. Well, of course, it clearly failed."
Of course, that's not what the CBO said. No matter which talking point they use about the stimulus (such as it "didn't create a single job" or "Obama made the economy worse"), Republicans are lying to the American people.
As the Washington Post reported in June 2012, the House Budget Committee heard testimony from the CBO chief answering a simple question: did the $787 billion Obama stimulus work? Unfortunately for Republican propagandists, Elmendorf clearly refuted Mitt Romney's claim that the American Recovery and Reinvestment Act (ARRA) was "the largest one-time careless expenditure of government money in American history."
Under questioning from skeptical Republicans, the director of the nonpartisan (and widely respected) Congressional Budget Office was emphatic about the value of the 2009 stimulus. And, he said, the vast majority of economists agree.
In a survey conducted by the University of Chicago Booth School of Business, 80 percent of economic experts agreed that, because of the stimulus, the U.S. unemployment rate was lower at the end of 2010 than it would have been otherwise.
"Only 4 percent disagreed or strongly disagreed," CBO Director Douglas Elmendorf told the House Budget Committee. "That," he added, "is a distinct minority."
Not content with that response, Kansas Republican Rep. Tim Huelskamp tried again. "Where did Washington mess up?" Huelskamp demanded. "Because you're saying most economists think it should've worked. It didn't." As the Post's Lori Montgomery detailed, Elmendorf drove home the point:
Most economists not only think it should have worked; they think it did work, Elmendorf replied. CBO's own analysis found that the package added as many as 3.3 million jobs to the economy during the second quarter of 2010, and may have prevented the nation from lapsing back into recession.
That May, Elmendorf's agency released its latest assessment of the stimulus showing why. At its peak in 2010, the ARRA added up to 3.3 million jobs, cut unemployment by as much as 1.8 percent and boosted GDP by up to 4.1 percent. It's also worth noting that the CBO once again confirmed that aid to the states and purchases by the federal government delivers the biggest bang for the buck, while upper income tax cuts provide the least.
Now, you don't have to take the nonpartisan CBO's word for it. Douglas Holtz-Eakin, a former CBO director who later served as an economic adviser to John McCain in 2008, agreed with his successor. "The argument that the stimulus had zero impact and we shouldn't have done it is intellectually dishonest or wrong," he explained in August 2011. "If you throw a trillion dollars at the economy it has an impact, and we needed to do something." (That "something", by the way, was over 40 percent tax cuts, making the Obama stimulus the largest two-year tax cut in American history.) Mark Zandi, also an adviser to McCain's 2008 campaign was adamant on positive role of the stimulus. Federal intervention, he and Princeton economist Alan Blinder argued in August 2010, literally saved the United States from a second Great Depression. In "How the Great Recession Was Brought to an End," Blinder and Zandi's models confirmed the impact of the Obama recovery program and concluded that "laissez faire was not an option":
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. These estimates of the fiscal impact are broadly consistent with those made by the CBO and the Obama administration.
But their modeling also suggests that the totality of federal efforts to rescue the banking system dating back to the fall of 2008 prevented a catastrophic collapse:
We find that its effects on real GDP, jobs, and inflation are huge, and probably averted what could have been called Great Depression 2.0. For example, we estimate that, without the government's response, GDP in 2010 would be about 11.5% lower, payroll employment would be less by some 8½ million jobs, and the nation would now be experiencing deflation.
Nevertheless, Republicans keep pushing their myth about the supposed "failure" of the 2009 stimulus program. Five years later, repetition doesn't make their lies any more true. Just ask the CBO