One year ago today President Obama signed the American Recovery and Reinvestment Act, popularly known as the Stimulus Bill. That bill has become something of a flashpoint in the country’s political conversation (if you can call it that) ever since, with Republicans making outlandish claims along the lines of “it hasn’t created one new job” when of course it created many, and so forth.
Well, a year has gone by, and at least some of the facts are in. And guess what? It worked.
Imagine if, one year ago, Congress had passed a stimulus bill that really worked.
Let’s say this bill had started spending money within a matter of weeks and had rapidly helped the economy. Let’s also imagine it was large enough to have had a huge impact on jobs – employing something like two million people who would otherwise be unemployed right now.
If that had happened, what would the economy look like today?
Well, it would look almost exactly as it does now. Because those nice descriptions of the stimulus that I just gave aren’t hypothetical. They are descriptions of the actual bill.
Really? Wait – a Republican told me that the stimulus bill was a failure and that it didn’t create any jobs!
Perhaps the best-known economic research firms are IHS Global Insight, Macroeconomic Advisers and Moody’s Economy.com. They all estimate that the bill has added 1.6 million to 1.8 million jobs so far and that its ultimate impact will be roughly 2.5 million jobs. The Congressional Budget Office, an independent agency, considers these estimates to be conservative.
I know, I know. Facts are so boring compared to exciting, incendiary talking points. But here are some more facts.
Look, folks, there cannot be any serious doubt that the stimulus bill has done a lot of good. Could it have been better? Sure. Could it have been implemented more perfectly? Sure, though it’s hard to find that much fault for minor bumps in the road in light of the bill’s scope. But here’s the NYT again:
The program has had its flaws. But the attention they have received is wildly disproportionate to their importance. To hark back to another big government program, it’s almost as if the lasting image of the lunar space program was Apollo 6, an unmanned 1968 mission that had engine problems, and not Apollo 11, the moon landing.
Unfortunately, though, the political universe in which we currently live is a very strange one. Success is failure; new jobs are not jobs; up is down. I’m not sure what the best strategy is going forward, since talking honestly about what has actually happened doesn’t seem to be in vogue.
this reminds me of the Sunday Globe piece a few days ago about the perception of crime statistics versus the reality of crime statistics.
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p>How do we know what we know? I wished I’d paid more attention in Philosophy 101 many years ago.
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p>Epistemology!
That “Employment” graph is very deceiving, it is a graph of “Change in Employment” and in every month except one there have been more unemployed people than in the previous month.
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p>I agree the Market and GDP are improving, but people right now care about jobs… and when the Stimulus bill was enacted, we had about 8.2% unemployment, today we have about 9.8% Unemployment. That means that 3 million more people are unemployed today than when the bill was signed.
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p>I am not saying the bill did not do something good, I am saying that as someone who deals with numbers all day long. non-quantifiable statements like “It would have been worse without it” or “It saved jobs” just doesn’t cut it. And as far as I am concerned, that employment graph show exactly the wrong thing to present to a person that actually understands the graph. It shows me we are losing jobs every month, just at a slower rate.
That the stimulus bill would magically result in businesses right away starting to hire again? That was never going to happen, short of a greatly expanded stimulus bill that never would have made it through the Congress. The rate of job loss had to slow before it could return to positive territory. That’s just the way it is. Or am I missing something?
There have been quantifiable numbers
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p>Those are quantifiable numbers. Estimates based on models to be sure, but legit numbers nonetheless.
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p>More precisely, where f(t) is number of people employed, with smoothing:
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p>2/2008 – 1/2009: f'(t) < 0, f”(t) < 0
2/2009 – 1/2010: f'(t) < 0, f”(t) > 0
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p>and, if the trend continues:
2/2010 – 1/2011: f'(t) > 0, f”(t) > 0
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p>Negatory. It tells the story. If the question is: are there more jobs in 2/2010 than 2/2009 the clear answer is: no — there are fewer. If the question is: are thre more joms in 2/2009 than 2008 the clear answer is: no — there are fewer. But, there’s another question: what’s the trend? Under the last year of Bush, not only were we shedding jobs, but each month shed more jobs than the month prior. Under the first year of Obama, we’re still shedding jobs, but fewer and fewer each month — and we’re just about at 0. 0 isn’t where we want to be, but it’s a hell of a lot better than each of the prior 24 months.
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p>You look at numbers all day. You understand that trends — if there’s a structural cause for those trends — are tremendously important. Surely you see the trend. The trend is good.
The correct comparison is the Civil Works Administration, which created 4 million high paying jobs over the course of months, compared to that ARRA is a failure.
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p>While I’ll agree it’s not a long term solution, when we’ve got 9.3 million people without jobs, 6.3 million of whom are long term unemployed, we need short term AND long term solutions.
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p>ARRA is a medium term solution, with some major exceptions, it funds projects that don’t strengthen the long term infrastructure, like paving roads, but it does it in a slow, plodding manner that doesn’t actually get people back to work. Pay people to put on plays, scare pigeons, pave roads and blaze hiking trails, things that should take no planning, and do it right away – not next month, LAST month.
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p>Like much of the Obama presidency, it represents a lack of vision and the triumph of pointless compromise. In February, had Obama proposed a program that said we’re going to employ 4 million unemployed construction workers across the country at prevailing wages for federal projects and we’re going to do it by the end of April and ignored Republican and conservative democratic opposition (which granted, would mean ignoring his cabinet and chief of staff) he’d be able to look back today and say, 4 million people who didn’t have a job when I was sworn in, have a job today. Instead, we get a debate over whether ARRA saved a million jobs or not.
it could certainly have been a better bill, and I’ve complained about Obama’s tendencies toward pointless compromise and “bipartisanship” on many occasions. But that said, it was surely a heck of a lot better than nothing, contrary to what Republicans would have the country believe.
you’re right about getting people to work now. Don’t forget, a huge portion of the stimulus resulted in cops, firefighters, and teachers not being laid off. That’s pretty straightforward immediate term employment.
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p>As for building roads, even “shovel ready” projects don’t really get started right away. The trick IMO is finding relatively low-skilled work that requires little in the way of tools. This way you employ people quickly, and employ more people “per dollar of project” directly. What is that? Dunno. Maybe planting lots of trees? Litter and cleanup? Sure, some road work and bridge work and building work, but the process takes many years, so lots of little projects require lots of time to push through. It’d also have been nice to figure out a way to stimulate more jobs which are typically held by women… and yes, that opens up a whole ‘nother can of worms.
Harry Hopkins figured out how to hire 4 million people in 4 months. Think about that. In 4 months, the feds hired 4 million people! Many of these people were quite talented, it doesn’t have to only be low skilled jobs.
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p>It’s political will that stops programs from running properly. My nephews school needs new blacktop in the play ground. It’s so torn up that they tell the kids “not to run” for fear they’ll get hurt. They need hundreds of desks to be repaired. It doesn’t take time to “push through” projects like these, it takes money and workers. If the feds showed up and said to a principal, you’ve got these 12 maintenance/construction workers for 12 weeks, do you really think they wouldn’t be put to good use? Can’t we come up with 3 months of projects like this that would actually make life better, actually put people to work and could get started tomorrow? Handing control to the legislature and state and local government was the problem, that’s when you have endless debate about what’s the best project, what’s the best way to use this money… It’s stimulus – the best way to use the money is to hand it to someone who’s got a project that is actually ready so we actually get people employed.
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p>Put 4 million workers back to work and all of a sudden, the state’s in a better position to start paying for it’s long term infrastructure needs on its own.
You can’t just build stuff any more, and for good reason. Reviews are essential — environmental, but also a public process is important. We no longer over0engineer things to a factor of 2, so more careful engineering and construction is essential. There’s also issues of right of way, complex ownership, etc.
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p>Things can’t be built as quickly as they used to be built because more care is necessary. That’s why they tried to limit to “shovel ready” projects anyway.
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p>I don’t think they’d be put to good use. Now, if they asked a building manager… but still, you want to bring somebody who doesn’t know the school to come in and work for 12 weeks? Not that simple. Background checks are required. He doesn’t know the facilities, so he’ll need to work alongside a town employee — who already has a list of things to do. And then there’s supplies — you’ll need to figure out what you’ll need and who’ll pay for it, and when. He’s only there for 12 weeks, so how much care will he put into his work?
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p>I’m not arguing that it’s impossible, merely more difficult than you make it out to be.
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p>I disagree entirely. The Feds don’t know the best use of the money locally. How could they? I do think that more money should have been spent on federal property because there are fewer layers of bureaucracy and red tape. Every single federal building should have been reviewed for energy upgrades, and every new roof should have come with solar panels, etc. The trouble is that lots of things we think of as “federal” actually aren’t, including most highways and bridges. Most of it is state agency based, or local.
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p>The frustrating thing is that lots of stuff built from 1920-1970 is all failing at the same time… the older stuff was built stronger, so as a result we’ve got lots of infrastructure crumbling. Now would be a great time to use stimulus to rebuild much of that. Trouble is, these kinds of projects take many years, and stimulus needs jobs fast.
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p>I would have liked to have seen a massive worker education program, paid, and across sectors. Major stimulus for people who can teach job skills. Why not bring in out-of-work electricians to teach them the latest code, techniques, and energy efficiencies? Why not bring in people and teach them how to work in nursery schools and day cares? Heck, pay people who are close to finishing their G.E.D. to actually finishing. By paying huge amounts for re-education, you can (a) hire people to teach, and (b) pay more people to get more job skills, which takes them out of the otherwise-employed pool.
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p>Another thing I would have liked to have seen: give each city and town $20/citizen for ADA upgrades. Flat out. Spend it in a year or lose it, and you must match it with $2/citizen from town funds. I don’t care if it’s sidewalk curb cuts, ramps, whatever. There’s no reason why our infrastructure is so sucky for the handicapped, and these projects are small enough that there’s little need for long review. Plus, they can be shopped to smaller contractors, who tend to be more nimble anyway. It would have been a quick $6B spent, and would have had a major positive impact on not just those who are currently handicapped, but for the baby boomers who aren’t yet handicapped but may become so as they grow older. The challenge with this and other funding is how to make sure that localities (a) spend it ASAP, and (b) don’t use it in substitute of what they would have spent it on anyway, thereby instead using it to save instead of spend…
I’m arguing that it’s possible and that when you let the likes of Harry Reid, Rham Emmanuel and 50 state legislatures decide what gets funded and why, that’s a recipe for failure. I’m arguing that FDR got 4 million people to work in 5 months, and by that yardstick, Obama and ARRA falls short. Liberals accurately called new federalism the death of the public safety net, yet by you’re reasoning, a program Richard Nixon would have called watered down is the right model.
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p>The CWA worked through people at the county and local level to figure out what needed to be done, they bypassed politics and went to bureaucrats, the folks who knew what needed to happen and could make it happen. Hopkins was criticized for working with Republicans across the country to get projects started, but the spirit was “if you’ve got a project, we’ll hire people to complete it.” It was a jobs program, not a block grant.
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p>Look at the examples I gave. There’s no environmental review for repairing a playground at a school, there’s nothing stopping desks from getting sent out to be repaired, CORI checks are quick and easy. In my town, the open space committee has a list of things that could happen tomorrow while the review of longer term projects occurred. You’re a fool if you don’t think every principal worth their paycheck doesn’t have that list, much less every executive director and department head.
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p>What I find frustrating is you call out a CWA like program as being unrealistic and then point to examples that would work perfectly under the CWA. Why does your ADA prject have to privatized? Why couldn’t the jobs be given to the same workers, but instead of some business owner skimming off the top to pay for their Harley and McMansion, hire all those staff, including the small contractor as an employees making foreman wages, to run the show, but as federal employees.
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p>The CWA didn’t have the feds control the projects, just the workers. The folks who could supply projects, they got workers, the folks who couldn’t, sorry no staff for you.
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p>You seem to want is for people to be put to the absolute best use. That takes time, we don’t have time, we’ve got unemployed people.
I’m not arguing that a FDR-esque program is the wrong idea. I think the stimulus was too small, and the 1/3 dedicated to tax cuts was dumb. I agree that programs need to get going quickly.
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p>But, I don’t think there are enough playgrounds and desks and potholes to spend enough money, and I also am not sure that focusing on narrow projects that require little planning (nor complex supply chains) works because, frankly, the percent of the unemployed who are capable of doing that work is somewhat low.
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p>I also put thinks like “make it ADA” in that repair category, and projects like that help to expand the scope of employment category a bit (more engineers, architects, etc needed). Still, it’s not very broad.
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p>You mentioned swimming pools. That’s the kind of project that I think just can’t be built nearly as quickly now. Not repairing — but designing and implementing. Everything from a more complex fire code to ADA to more efficient heating and cooling means that all projects take longer to design and build — and that ignores the phenomenon that local government is more open and more amenable to neighborhood concerns than 3/4 of a century ago. Those kinds of projects have lag.
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p>So, the question is: how much work could be done “now”? I don’t really have a sense for that. After all, some work just takes bodies, but most requires tools, and frankly there isn’t an overabundance of tools nor materials. While munis typically don’t have 90% drawings ahead of time, often county and state agencies do — and lots of those projects probably could have gone forward quickly. At the local level, I think about something like sidewalk repair and rebuilding — we’ve got a 10ish year plan to get it all done. There’s no reason why, in addition to the “1” year in FY2010 that my town did, there couldn’t be another “2” years paid for under stimulus. Easy work, little engineering, no process. Trouble is, if all towns tried to triple their sidewalk construction in the same year, could it happen? Are their enough skilled concrete floaters? Enough tools? Enough equipment? Concrete? I don’t have any idea, I’m just skeptical that things could ramp up super fast in many places, although I suspect that some good civil engineers would have a head as to which projects could ramp up.
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p>As for employing the workers directly, there are a few problems with that. One is purely political, but it’s a very real one. Another is that it’s not clear the Feds have the capacity to add 4M additional workers in the span of a few months. You’ve got to hire those people, process them, etc. That takes far more effort than it did for FDR, which went something like: “You older than 14? You got two arms and legs? You a white man? Good, you’re hired.” Contracting it out does allow for “skim”, but it also allows for things to happen more quickly because each contractor can add 10% to their payrolls much more easily than the Feds can add 4M to theirs. I think.
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p>Don’t get me wrong, I’m not opposed to hiring some workers directly — but we typically don’t have gov’t workers doing the ARRA or FDR projects now: contractors build roads and sewers, not gov’t employees.
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p>Again, I don’t disagree with the big picture. I’m just not so sure that things can be ramped up nationwide to the extent you imagine in all areas, and I doubt that hiring all those workers directly to Uncle Sam is wise in terms of getting folks to work quickly and effectively.
During the 50s and 60s economic orthodoxy said that FDR had saved the country with massive stimulus, so after the war was over, economic planners looked around for other countries to try it out on. It turned out to be a big bust. First of all it was incredibly expensive just to hand out money as fast as possible. It was a lot cheaper just to write checks to the poorest people. Then you got the problem of dependency on the government. Finally it didn’t work as far as developing a healthy private economy.
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p>So you have to really decide what you want this money to accomplish. My sense it that policy-makers are a long way from government takeover of anything business. They will sell stimulus spending as restarting the private economy. But until we get into state ownership of businesses, they will have to deal with contracting and the inevitable waste and graft associated with that kind of partnership.
Where was this big bust? Germany, France, Great Britain or Japan? Last I checked the economic orthodoxy of the 1950’s and 60’s was to prop up puppet governments to fight the Soviet Union and put money in the hands of United Fruit’s shareholders.
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p>Please educate me.
Of your examples Britain illustrates my point best. They received most of the Marshall Plan money but they were still an economic basket case for decades after. Germany and Japan only recovered when they developed better tax policies. The worst examples of Keynesian destruction were developing countries in Africa, where white elephant projects sprouted in hope that they would make growth happen.
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p>For Keynesian stimulus to be true, there really should be no difference between tax cuts, solar panels, or white elephants, it’s all just money.
If you’re building things, you’ve got to build things that add value. That means basic infrastructure (transit, utilities, etc) where it doesn’t exist, in a complete network kind of way. In places where that exists (USA) it’s hard to do upgrades as a stimulus because the planning requirements are high.
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p>What dhammer seemed to suggest above was not large projects like that, but rather bang out a whole bunch of deferred maintenance nationwide… since it doesn’t have a difficult planning stage, often allows for low skilled work, and is distributed nationwide, it would make for a nice short term jobs program.
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p>This problem of “dependency on the government” under dhammer’s FDR plan in tUSA in 2010 is non-existent. In terms of doing-it-all-within-Fed or contracting it out, we’re still talking about a tiny percent of the overall GDP, so this idea of negatively impacting the private economy is silly too — if anything, it would help the private economy since very little of the economy is directly involved with FDR-esque projects, but everybody employed would be sure to buy clothes and groceries and tax services and oil changes and college for their kids and all that jazz.
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p>We had a real opportunity to experiment with this kind of stimulus after Katrina. I believe the gov’t should have housed NOLAian children and caretakers out of NOLA, and then brought in every other able bodied citizen into the city Mon-Fri to work 50 hours a week in exchange for food, shelter for the family, and a small salary. Those with useful skills (heavy equipment, trades, whatever) use your skills. The rest — you’ve got a strong back and two arms, and we’ll keep you busy.
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p>It would have been a perfect “dry run” of a stimulus, but we didn’t do it. shrugs
Don’t get me wrong, I agree with stomv 100%.
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p>On the other hand, New England is losing out on rail funding because we didn’t have plans in place. (And, we are the best place in the country for high-speed rail!)
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p>I can’t lay my hands on the most recent news story about his, but the following quote from a Globe story last March is telling:
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p>That seems to be what has come to pass.
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p>Granted, it’s harder to site things in New England for many reasons, but this is dysfunctional, and we ought to ask ourselves why.
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p>And what about other public works? Seems to me every physical-plant agency and DPW (and maybe school department and library) ought to have a plan for what they would do with a few million bucks (or billions, in the case of rail).
USARail’s long term prospects hinge on a sympathetic Congress. Which Congresscritters are most sympathetic? Those who have good rail service in their district.
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p>Acela is “good enough” to have the Northeastern Corridor’s congresspeople for the most part. But, CA and the Great Lakes are a mixed bag, and the Southeast politicos often oppose federal spending on rail.
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p>So, how to change that long term? Give them some high quality rail! Acela-quality service centered around Chicago, from SoCal to NoCal, and from DC to Atlanta will really add to the number of routes used by voters. By creating other high speed rail regions, Amtrak is creating more political demand for high speed rail.
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p>Shovel ready played a part to be sure, but I don’t think that was the entire calculus. There’s resentment among rail advocates and congressmen that the Northeast has gotten the lion’s share of rail funding for the last 15-20 years.
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p>IMO, the best investment for long term improvements in Acela is building good rail elsewhere, even if it doesn’t “connect” directly. It’s a bit perverse to be sure.
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p>”Shovel ready” (90% drawings or whatever) require lots of investment in time and resources. Drawings for 90% drawings which are 5+ years old are no longer 90%; building codes, standards, materials all change. Getting plans to 90% ain’t free; getting them there “just in case” we have a twice-in-a-hundred-years stimulus seems pretty wasteful.
Specifically exempted public buildings (other than some politically connected projects). There was originally talk of including them but for some reason they were taken out. General construction and architectural services are not in a recession but in a depression, but congress knows what’s best.
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You of all peeps should be thrilled that the government kept their dirty hands off of your profession and industry.
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p>Your cynical last five words indicate that you’re much like the Republican Congressmen who badmouth government spending but then beg for it in their own domains.
if you going to spend it at least do it right. Public building estimates have been coming in 20% lower than expected, great time to get a public building (at prevaling wages also).
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p>If we want to go back to the WPA days there were lots of buildings built.
This is a hole I can drive Haley Barbour through. The best way to determine which projects will have the best return is through private market investment, which does the best job of determining risk and reward.
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p>Investment of public money by public officials in private companies is less efficient because it depends on a few public officials making decisions on less information than is available to the market. Second it invites all kinds of corruption: for instance companies will offer legalized bribes to get the government to invest taxpayer money. Then the government will have to support its investment by altering the market with breaks, targeted investment etc in favor of companies and industries. Not only is this malfeasance, it’s less efficient and will produce slower growth.
* Investing $100,000,000 in sewer upgrades to handle growth in the neighborhood, eliminate CSOs, and replenish ground water more effectively
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p> * Investing $100,000,000 in the MBTA, resulting in faster, more consistent, safer service in a bigger region
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p> * Investing $100,000,000 in our police force, resulting in better trained and more effective police officers
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p> * Investing $100,000,000 in public health, resulting in the reduction of vectors like H1N1 spreading wildly, lowering long term health costs, and finding cures to disease
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p> * Investing $100,000,000 in our universities, resulting in the UMass system creating better research relevant to MA, and in more MA HS graduates coming out with the tools to keep the MA economy in high gear for the next 50 years
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p>How will we ever figure it out? I know! The best way to determine which projects will have the best return is through private market investment, which does the best job of determining risk and reward.
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p>No wait, that’s not right. Private industry is not at all qualified to instruct the people which priorities should be pursued.
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p>Go back to the public library and read something other than Ayn Rand.
I agree the state needs to make decisions with respect to PUBLIC projects. But the state should not be investing in private companies. You get investments like evergreen or other politically connected firms.
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p>If a private company wants to make an investment in evergreen it’s their loss or gain. Why should the state be able to take your and my money and invest it in a company. It’s a micro version of the Kelo decision.
Rainy day funds? Free cash?
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p>Is it OK for those funds to be invested in anything but federal or muni bonds, or commodities?
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p>Yeah, and it’s not a micro version of Kelo. Not even close.
both rainy day funds and free cash should be in liquid money market accounts. I could be wrong but I think it’s against the law for at least cities and towns to invest in anything other than this.
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p>Pensions money should be invested in index funds – low cost – and no funny business with advisers being politically connected and making huge salaries.
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p>Read a little about what California has done to it’s pension fund – this is just one of many stumbles.
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You are confused between stimulus and borrowing for a capital project. Stimulus funds are supposed to get the private economy moving again through some kind of “multiplier effect” whereby we borrow from the future and spend the money now.
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p>I suppose you could argue that if we pay an extra government employee $70K this year then that employee will spend the money somewhere… in that case it doesn’t matter which of your projects you pick.
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p>However if you are trying to invest money and have it pay off a greater amount in the future, then each of your projects ought to have a cost/benefit analysis that says that hiring another police officer will result in X amount of increased commerce, resulting in Y increase in tax revenues and Z increase in utility for the people policed. Which is just capital spending, bonds etc.
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p>Under our system if you really want a good rate of return you pretty much have to invest that money in a private concern.
The stimulus bill hasn’t created any jobs, but Republican looooove to brag about the money it brought back home.
The government borrowed 787B from the future and spent it today. Even by their own claim that they have only sent out $450B so far, and to use their generous estimates:
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p>$450,000,000,000/1,800,000 jobs= $250,000 dollars per job saved/created…
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p>There was no noticeable “multiplier” effect as unemployment increased. Is the stimulus really supposed to work as a Keynesian multiplier? Why hasn’t it? As economics the stimulus bill proves that Keynesian claims to government spending are not believable.
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p>Is the stimulus just supposed to put people back to work and a little food on the table when times are tough? This seems to be more of what it does, however so much of the money is simply lost in heat transfer that you would be much better off just writing out checks.
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p>All the public school teachers who call/write to say that their jobs were saved by the stimulus now have their heads on the block a year later. Are we going to spend another $800B this year too? The lines never cross on this project, the spending will never pay off.
Ben Bernanke refused questions from Congress about where the bailout money went. We are not waterboarding the right people in this case.
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p>Now if you worked at a private company and at your annual Performance Management Plan you told your boss you created jobs by mortgaging the next ten generations what do you think the boss would say?
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p>Far simpler things like repeal Sarbanes-Oxley and going back to pre-Clinton on financial industry regulation.
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p>Now another reason, perhaps the most definitive of all reasons which actually confirms positively that the stimulus package is really a part of the plan to destroy America?
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p>Mainstream Media brought the subject up, therefore that concept has come directly from the think tanks of Satan’s highest minions.