Published February 28, 2012
President Obama’s poll numbers are getting better every day. But one clear weakness remains in the public mind — his performance in handling the U.S. economy.
The most unpopular element of his economic stewardship is the stimulus, officially titled "The American Recovery and Reinvestment Act." It turned 3 years-old last week.
A new Pew poll finds 41 percent of Americans disapprove of the 2009 stimulus while 37 percent approve. In 2010, a CNN poll found three quarters of the public felt most of the stimulus was wasted and did not help the economy. Later in 2010 a Rasmussen poll found 56 percent opposed to any suggestion of a second stimulus.
The upcoming presidential election is likely to be a debate about the value of the stimulus. Before the rhetoric gets too hot, a simple question begs to be answered: Is there any evidence that the stimulus helped the economy?
As Sarah Palin might say, “You betcha!”
But in looking back on the news coverage and the angry rhetoric used by the GOP during the congressional debate of the stimulus, it is striking how little discussion there was of what the stimulus actually entailed.
First, the bulk of it was composed of tax cuts. In fact, the stimulus was one of the largest single tax cuts in U.S. history. To say the stimulus failed is to make the argument that tax cuts do not stimulate the economy.
Ninety-five percent of all Americans got a tax cut under the plan. Small businesses and working families received a tax cut. First-time homebuyers received a tax credit. Parents caring for their young children received a tax credit. Some 8 million people received tax credits and financial assistance to help pay for their college education.
The next time a Republican brags about his or her opposition to the failed stimulus, a cynic might respond by asking why they hate tax cuts so much.
In addition to the tax cuts, the stimulus also contained emergency stopgap funding to states so local governments did not have to lay off teachers, police, firefighters and other “public sector” employees.
It is important to keep in mind the dire condition of the economy when the stimulus passed. It was hemorrhaging jobs at the rate of hundreds of thousands per month. During President Bush’s last full month in office, December 2008, the economy lost 779,000 jobs. More jobs were lost that month than in any other single month in the previous 60 years. The GDP, the measure of all economic activity in the country, dropped by an unprecedented 9 percent in the final quarter of 2008.
The stock market took an enormous hit, along with the values of people’s homes and other financial assets.
Still, Republicans lambasted the stimulus plan as socialism, a bailout and the government picking winners and losers.
President Obama and the Democratic Congress passed the stimulus bill without a single Republican vote in the House of Representatives and with only two Republican votes in the Senate.
Starting in April 2009, shortly after the stimulus was enacted, the outlook began to improve. The economy began losing fewer jobs per month and eventually started gaining jobs each month. In January 2012, the economy added 243,000 jobs. GDP in the final quarter of 2011 increased at a rate of 2.8 percent. Private-sector layoffs are now well below pre-2008 crisis levels. The stock market stabilized and there are now some signs of improvement in the national real estate market.
By all those factual economic measures, the stimulus was successful.
The president’s critics can, however, fairly argue that the stimulus was not as successful as the Obama White House claimed it would be when it was selling it. Some of their predictions about the scale of improvements the stimulus would bring turned out to be flat wrong.
The president’s economic team promised three years ago that the unemployment rate would not rise above 8 percent because of the stimulus. Last month, the Congressional Budget Office projected that unemployment will remain above 8 percent until 2014.
The administration also claimed the stimulus would not add to the deficit. In fact, it will likely end up doing just that.
Of course, the president will say the unemployment rate would look a lot better if congressional Republicans would just pass a jobs bill similar to the one he proposed at the end of last year.
And the president can argue that if the GOP would work with him to pass a deficit-reduction plan, similar to Simpson-Bowles, which raises taxes on the wealthiest Americans, the deficit could be brought under control.
In 2012, a similar question can be asked: “Is the economy better off than it was four years ago?”
The factual answer is yes, and the stimulus is a large part of the reason why.
Juan Williams is an author and political analyst for Fox News Channel. This column originally appeared in The Hill newspaper and website.