The conventional wisdom has been that the stimulus hasn't worked as well as had been projected. This media meme has been widely repeated by partisans and those impatient with Obama for not having saved the world in 10 months.
The facts on the other hand tell us that the stimulus turns out to be working pretty much exactly as the CBO projected it would, and in many cases better.
The conclusion is that the stimulus has had essentially the same impact on GDP and employment as the CBO predicted in March 2009
As Drdemocrat wrote today, The Hill is reporting that the stimulus has created or saved between 600,000 and 1.6M jobs, but this bit of data isn't illuminating some of the more interesting parts of the CBO report.
The reality is that the stimulus is working, and it's precisely because of the kinds of projects Democrats wanted and despite the types that Republicans fought for. Derek Thompson at the Atlantic writes:
The conventional wisdom (which I've helped forward sometimes) is that the stimulus has worked much worse than the government expected. But the fact that the CBO's new estimates are only changing by fractions of a percentage point -- and often for the better -- suggests that the conventional wisdom isn't so wise.
The most interesting thing in the article I saw was a graph showing the multiplier effects of the various stimulus programs. Transfer payments to state and local government for infrastructure projects had a high estimate of 2.5, ie the amount of money generated in the GDP was 2.5 greater than the amount spent. Lower down on the list are transfer payments to individuals at 2.2. Even further down on the graph were tax cuts for middle income people at 1.7 and one time payments to retirees at 1.2. Coming in with negative effects on the GDP were tax cuts for the rich (employers) which came in at a paltry .5 on the high estimate end and .1 on the low estimate end. Thank god we didn't go with the Republican plan, right!?
Let's make that clearer. Tax cuts for the rich lost us money and further damaged our economy, but thanks to the infrastructure spending and other Democratic policies, Republicans' failed ideas were still balanced out overall. Ie, the Republican plan of trickle down tax cuts for rich employers fell flat on its face, as we said it would.
The CBO is a nonpartisan agency, but this sure looks like the handiwork of dirty Keynesians, doesn't it?
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There are a lot of smart people out there who are writing that this stimulus didn't have enough tax cuts, but I think reports like this have to make you wonder...
So what have we discovered? Well, of course we discovered what us liberals already knew. The most effective thing to do in a deep recession or depression is to stop bailing out rich people with tax cuts and use that money to get working class people working again, via infrastructure projects and bailouts to the middle class. So now when Republicans whine and moan about wanting more tax cuts to spur a so-called failed recovery, now we've got the facts and the data on our side to tell them to stuff it.