White House defends $800B stimulus as a key to ending the recession


President Obama signed the economic stimulus bill on Feb. 17, 2009. (AP Photo/David Zalubowski, File)

RANCHO MIRAGE, Calif. -- The White House launched a fresh effort Monday to defend the economic stimulus passed at the beginning of President Obama’s tenure as Republicans sought to pillory the law enacted five years ago.

Obama and congressional Democrats passed the $800 billion stimulus, known as the American Recovery and Reinvestment Act, as a response to a deep recession that started in December 2007 and, by the time Obama took office, was costing 800,000 jobs per month. In the five years since, the law has become a Rorschach test for judging Obama’s response to one of the greatest economic calamities in U.S. history. The nation's unemployment rate topped out at 10 percent in October 2009 and has slowly declined in the years following. It now stands at 6.6 percent.

The White House and Democrats argue the stimulus made a massive difference, helping end the recession. According to a report released Monday by the White House Council of Economic Advisers, the stimulus saved or created an average of 1.6 million jobs a year from 2009 through 2010.

“[T]he Recovery Act had a substantial positive impact on the economy, helped to avert a second Great Depression, and made targeted investments that will pay dividends long after the Act has fully phased out,” CEA Chairman Jason Furman said Monday in a blog post.

Republicans, however, have argued the stimulus was a colossal waste of taxpayer money that failed to boost the economy and noted that Obama’s own projections suggested that unemployment would rise far less than it actually did if the legislation was passed.

“Five years later, the stimulus is no success to celebrate,” Senate Minority Leader Mitch McConnell (R-Ky.) wrote in a Reuters op-ed Monday. “It’s a tragedy to lament.”

Most independent economists agree that the law, combined with the aggressive efforts of the Federal Reserve, brought the economic contraction to an end in June 2009. The most common critique of the legislation from professional economists is that it was too small to offset the dramatic economic shortfall in early 2009.

The stimulus consisted of tax breaks targeting lower- and middle-income Americans, fresh spending on infrastructure projects, green energy and health-care technology and aid to state and local governments under intense financial pressure from the recession.

Furman noted in his blog post that when it became clear the economy needed more support, the White House took new actions to stimulate the economy, including passage of tax cut in December 2010 that boosted Americans' disposable income in the final two years of the administration.

The CEA report also argued that the stimulus had a longer-term lasting impact in a number of key areas, including roads and bridges, broadband Internet and education.

“While far more work remains to ensure that the economy provides opportunity for every American, there can be no question that President Obama’s actions to date have laid the groundwork for stronger, more sustainable economic growth in the years ahead,” Furman wrote.

Zachary A. Goldfarb is policy editor at The Washington Post.
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