Wednesday, July 6, 2011

Ezra Klein: CBO, Economists Call Stimulus A Success

Paul Krugman has repeatedly and correctly argued that President Obama should have pushed for a bolder stimulus package. Republican presidential candidate Rick Santorum, on the other hand, has frothed with misinformation, irrationally stating that since the government lowered the initial report of the number of jobs created, the stimulus resulted in a loss of jobs–a falsehood held by Fox News viewers. Then there are the Republicans who railed against the stimulus in Washington while lobbying for its funds at home and taking credit for its successes. Ezra Klein (left), points out the bottom line: the stimulus package, however inadequate, was indeed a success, according to the nonpartisan Congressional Budget Office and other economists:

Most authorities don’t think the stimulus failed. The nonpartisan Congressional Budget Office, for instance, says it created between 1.2 million and 4.6 million jobs “compared to what would’ve happened otherwise.” IHS Global Insight, Macroeconomic Advisers and Moody’s all estimate that the laws ultimate impact will be roughly 2.5 million jobs. Economists Mark Zandi and Alan Blinder put it at at 2.7 million jobs.

…Any serious assessment of the stimulus needs to include some variation of the six words that appear in the CBO’s study: “compared to what would’ve happened otherwise.” If the stimulus created three million jobs even as the economy lost seven million jobs, the stimulus worked. If it created only one million jobs, it performed far worse than the administration promised.

Either way, the stimulus was swamped by an economic crisis it was never large enough to neutralize. But that doesn’t make it unsuccessful.

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