Stimulus: One Year In

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In the face of withering Republican attacks, a skeptical American public increasingly fatigued with government spending and a poor marketing campaign by the White House, the Obama administration is finding it difficult to sell the stimulus package as effective in preventing an economic freefall.

One year after its passage, the White House is doubling down, trying to reframe and recapture the debate by touting the successes of the stimulus package.

According to the White House, the stimulus package has created some two million new jobs.  The non-partisan Congressional Budget Office believes that estimate may be low, putting the top-end projection at 2.4 million jobs created thus far. 

Nonetheless, the Recovery Act is still not very popular for a number of reasons.  Polls have shown that voters often confuse the stimulus package with the bailout of the banks and auto industry, oftentimes with the help of Republican lawmakers.

The White House itself set the bar much too high in its push to get the bill through Congress, claiming that it would keep unemployment firmly around eight percent while creating over three million jobs in two years.

Then there is the perception problem.  While the stimulus package may very well be creating or saving jobs, net job creation is still negative each month, and the economy has shed three million jobs overall since the bill was passed.  Moreover, the White House sold the package as a “jobs” bill rather than an emergency injection of money into the economy to prevent a free fall on the scale of the Great Depression.

All of those factors have combined to give the public a very dim view of the stimulus package.  According to a recent New York Times/CBS News poll, just six percent of Americans believe that the stimulus package has created jobs.  For a little context, the Republican National Committee pointed out that recent polling showed more Americans believe that Elvis is still alive.

The stimulus package has also been fraught with problems in the shape and execution of the bill.  In order to garner any Republican support, the White House loaded the package with tax cuts, which nearly one-third of the bill was comprised of.  While that may be good politics, most mainstream economists would agree that direct government spending is much more economically simulative.  Many economists, even those inside the White House, believed at the time that the package was much too small, but the White House argued that the bill was as large as could be given the political constraints of the time.

Furthermore, much of the money spent thus far has been designed to sure up the safety net of Americans rather than directly put people to work.

Through January, $334 billion in spending has been approved.  However, just $179 billion has been spent, and the vast majority of that went toward extending unemployment benefits, helping states fill budget gaps and other measures that eased the burden of the recession but did not create jobs. Comparatively, just $31 billion has been spent on big-ticket construction projects while $119 billion in tax cuts have been handed out.

The White House says that 70 percent of the funds will be spent by September.  However, if Republicans continue their assault on the bill with little pushback from the White House and fellow Democrats, the bill may have virtually no support by then.
   
“In the year since the Democrats’ ‘stimulus’ program was enacted, over 3 million jobs have been lost, billions of dollars have been wasted, and an unprecedented debt has been passed on to our children – these are not the results that America hoped for. Struggling small business owners, families, and young workers see trillions in debt, on their tab, and still no job creation,” House Minority Whip Eric Cantor (R-VA) said in a statement.

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