The Des Moines Register
It has become an article of faith that the stimulus package pushed through Congress by President Barack Obama shortly after taking office in 2009 has been a total failure.
Few would dare suggest otherwise. Which explains why Gov. Terry Branstad felt confident in a recent Des Moines Register guest essay attacking the president to dismiss it as a “wasted $1 trillion stimulus package” without equivocation and without citing any evidence.
In fact, the stimulus package did have a measurable impact on the economy, according to the nonpartisan Congressional Budget Office. The CBO calculates the stimulus raised actual gross domestic product every quarter since 2009. An average of 2.3 million jobs were created or saved during the first three years, when 90 percent of the money was spent. It propped up budgets for families, school districts and police departments and paid billions to workers to build needed infrastructure.
The $831 billion American Recovery and Reinvestment Act is a classic example of what most every economist agrees is necessary in the teeth of a recession: The government must put money into circulation to relieve suffering and fuel spending until the economy rights itself.
The only question at the time was whether the stimulus package was too small. Some economists, including Paul Krugman who writes a column for the New York Times, still say more is needed now to boost the recovery. And, while overall employment growth has been slow, much of that is because of a continuing decline in number of public sector employees.
Even though the stimulus has not by itself returned us to pre-recession economic growth, it was far from a waste of money. About a third of the money went directly into the pockets of Americans in the form of tax cuts. Another large slice went to states to cover growing Medicaid budgets and for extensions of unemployment insurance and food stamps for those who lost their jobs. It would be wrong to say money was wasted on the unemployed and on families that needed food, health care and living assistance.
Beyond the relief, the stimulus act is credited with being the most important investment in lasting public projects since the New Deal, including green-energy projects, electronic medical records systems and transportation improvements that will pay dividends for decades to come.
Though some critics say Congress should simply cut taxes across the board to boost the economy, that is just another form of government stimulus. The Obama stimulus was more effective because it was targeted. The act included tax cuts and new spending directed to families and displaced workers most likely to put the money back into circulation.
The impact of the stimulus law was felt directly in Iowa, which has received nearly $4 billion. More than half went to Medicaid and extensions and expansions of unemployment insurance benefits, and much of the rest helped Iowa cities avoid layoffs of teachers and police officers.
That’s nearly the equivalent of one year’s state general operating budget.
According to the Iowa Policy Project, an Iowa City research group, the American Recovery and Reinvestment Act helped bridge a precipitous drop-off in tax revenues during the recession. The Policy Project said Iowa used the money “precisely as intended: targeted, timely and temporary relief so that states could continue funding critical services, such as K-12 education and health services to individuals and families.”
Branstad has repeatedly derided the Legislature and his predecessor for using “one-time money” to balance the state’s budget, but he has never said whether he would have turned it down. To do so would have been irresponsible.
In today’s toxic political environment, some critics may never believe anything the Obama administration does has any value. But they should at least look at the facts before they accept at face value the idea that the stimulus was “wasted.”