CBO Latest to Confirm Success of Stimulus
With its estimate Tuesday that the $787 billion Obama stimulus package created up to 2.1 million jobs in the last quarter of 2009, the Congressional Budget Office (CBO) joined in the near-unanimous chorus of voices proclaiming the package's success. Of course, it wasn't just the overwhelming consensus of economists which concurred that the stimulus saved or created about two million jobs while adding over three percentage points to U.S. gross domestic product. As the Washington Times, the Wall Street Journal, Bloomberg and ThinkProgress all documented, the hypocritical groveling of Republican Congressmen for stimulus dollars they opposed only served the validate that the recovery package was good public policy.
Echoing Obama administration claims that the American Recovery and Reinvestment Act (ARRA) produced a net of between 1.5 and 2.0 million jobs for the economy, the CBO estimated that the economic stimulus law added between 1 million to 2.1 million workers to employment rolls by the end of last year. As ABC noted, the Recovery Act "also boosted the country's economic growth by 1.5 to 3.5 percent during the time period and lowered the nation's unemployment rate by between 0.5 and 1.1 percentage points."
And going forward, the CBO forecasts, the picture is brighter still:
CBO projects that the stimulus measure to have a greater impact this year, boosting gross domestic product by 1.4 to 4 percentage points and lowering the unemployment rate by 0.7 to 1.8 percentage points.
Just as important for policymakers, CBO Director Douglas Elmendorf shed some light on which aspects of the stimulus bills gave taxpayers the biggest bang for the buck. As most Democrats argued, federal spending on goods and services, transfers to state and local governments for infrastructure and other aid, and unemployment benefits delivered the highest estimated "multipliers." Tax cuts, especially for wealthy Americans and corporations, yielded the smallest returns.
Sadly, President Obama deferred to Congressional Republicans in larding up the tax cuts provisions to over 40% of his reduced stimulus bill. For his trouble, he received exactly three GOP votes in the Senate - and none in the House.
Elmendorf also provided the Obama administration more ammunition in battling its stimulus critics. As ABC noted:
In the report, the CBO noted that economic growth in 2009 was worse than they had predicted at the time that the stimulus was enacted, but that was due to a weaker economy than originally expected, rather than any failings of the stimulus.
"Economic output and employment in 2009 were lower than CBO had projected at the time of enactment," the CBO stated. "But in CBO's judgment, that outcome reflects greater-than-projected weakness in the underlying economy rather than lower-than-expected effects" of the stimulus package.
The Congressional Budget Office has plenty of company in confirming that the stimulus is working as designed. In September, stimulus foe and South Carolina Republican Senator Lindsey Graham asked for $360 million to improve Interstate 73 near Myrtle Beach, funding he said "is expected to create 5,789 new jobs in the I-73 corridor region." And Oklahoma's Tom Cole, who called the stimulus a "recipe for disaster," nevertheless sought a grant to help develop an international trade center as part of a project he called, "a catalyst for the potential creation" of almost 30,000 jobs. They and dozens of other Republicans are saying in private what the CBO and virtually the entire economic profession is saying in public.
The stimulus is working.
UPDATE: The White House responds to the CBO report on the success of the stimulus, noting "it doesn't get any clearer than this." Just in case there was any doubt, the administration's Jared Bernstein cites former McCain economic adviser Mark Zandi, who remarked, "the stimulus did what it was supposed to do: short-circuit the recession and spur recovery."