2009 Stimulus Report Card

On its fifth year anniversary, opinions – predictably – are mixed about the success of the 2009 American Recovery and Reinvestment Act, President Obama’s massive $800 billion stimulus bill.

A good grade:

The White House: It increased GDP by roughly 2 to 2.5%  from late 2009 through mid-2011, avoiding a double-dip recession and added about 6 million “job years.”

Mike Grunwald: “My obsession with the stimulus has focused less on its short-term economic jolt than its long-term policy revolution … the report is a reminder that the Recovery Act succeeded in creating jobs, boosting growth and saving us from a much worse fate … we’re well past the beginning of the end.”

Danny Vinik: “Should the Recovery Act have been larger? Sure … [But] it saved the country from a second Great Depression while funding transformative programs that will benefit America for decades to come.”

A failing grade:

House Speaker John Boehner said in a Twitter message that “more Americans believe Elvis is alive than believe the stimulus created jobs.”

Sen. Marco Rubio, according to Politico: “Well, of course, it clearly failed … underemployment is still too high, the number of people that have dropped out of the workforce is astounding, unemployment remains stubbornly high and our economy isn’t growing fast enough — proof that massive government spending, particularly debt spending, is not the solution to our economic growth problems.”

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  • Pedro_Rondova

    Goal: to protect the economy from an even worse crisis
    Grade: A-
    In the short term, the stimulus did what it was meant to do. In preventing a deeper recession, the value of the stimulus was well worth the cost.

    Goal: to boost employment and growth over the long term
    Grade: C-
    Over the long term, growth has been sluggish and unemployment has remained too high, though some positive impact of the stimulus has lingered and contributes to the ongoing recovery. In terms of its long-term impact, the stimulus either should have been larger, or needed a booster shot that never came.

    • embo66

      “In terms of its long-term impact, the stimulus either should have been larger, or needed a booster shot that never came.”

      And, as I recall, Obama argued for each at each relevant point in time.

      However, another problem the recession didn’t so much cause as rudely yank the covers off of: Our core economy has seen some paradigm shifts since the 1990s — types of new jobs being created, etc. — that no amount of tax cuts (the GOP solution to everything) or stimulus spending could ever properly address.

  • sandbun

    Pretty telling the nay side is politicians rather experts.

    • Lorehead

      Also, his argument is self-evidently ridiculous. First, the largest single component of the stimulus was a tax cut, and Marco Rubio does not believe that tax cuts can’t stimulate the economy. He doesn’t even believe government spending can’t stimulate the economy, so long as it’s spent on things he likes, such as weapons and oil pipelines.

      Second, Republicans consistently have justified their debt-financed tax cuts and spending as “stimulus.” 165 Republican representatives and 33 Republican senators voted for the Economic Stimulus Act of 2008, including Paul Ryan, and George W. Bush signed it into law. That was a package of tax cuts and new spending that cost $152 billion, all paid for by borrowing. Here, read what they said about stimulus twelve months before Obama took office. Republican opposition to “stimulus” began at noon, January 20, 2009.

      Third, Paul Krugman calculated that the stimulus was too small and predicted unemployment above 9% as a result—in advance, not after the fact. He also predicted that lying, partisan hacks would misrepresent this outcome as proof that “stimulus doesn’t work.”

      Finally, comparison of countries that passed stimulus, particularly debt-financed, to countries that passed austerity in fact proves that stimulus was a better policy than austerity in 2009 and 2010. You might as well claim that casts don’t work because they don’t heal broken bones overnight.

  • terryhallinan

    The stimulus package wasn’t just too small but had a large monetary component which is not nearly as efficient as a stimulus.

    • embo66

      Or put another way: Quantitative easing helped Wall Street a whole lot more than it helped Main Street. (A 3% mortgage rate doesn’t help anybody who can’t come up with the newly required 20% down payment.)

    • Lorehead

      In this context, we’re talking about the ARRA, not QE.

      • terryhallinan


        The point is really quite simple. Spending is what drives the economy and moves the elevator up. Other measures are relatively weak with the usual time lapse and benefit mainly those who need it least. Giving bankers trillions and newly homeless people sympathy is not the greatest way to strengthen the economy.

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