Source: San Francisco Federal Reserve Bank
Source: San Francisco Fed

Nobody wants to be defined, President Obama said, by something they prevented. Even if that something is as big as a second Great Depression.

That's why the stimulus has become such a political orphan. The Recovery Act was only big enough to stop a worse collapse, but not start a better recovery. And since we don't know how much worse it would have been otherwise, it's easy to say that it didn't do anything at all. But that, of course, isn't remotely true.

Take highway spending, for example. Between 2008 and 2011, highway spending didn't really change, as you can see above—and that's pretty impressive. See, states are required to balance their budgets, so we would have expected their highway spending to sink as their tax revenues did during the Great Recession.

But the stimulus prevented that. Its highway grants gave states the money they needed to keep spending from falling off a cliff—which, it turns out, would have been terrifyingly steep. Sylvain Deluc and Dan Wilson of the San Francisco Fed estimate that, in real terms, highway spending would have declined 20 percent if not for the stimulus. That, as the dotted line shows, would have taken spending down to 1990 levels.

Now, Deluc and Wilson were able to calculate this by looking at how much grant money each state got, and how much each state's highway spending changed. If the stimulus didn't make a difference, then every state's spending should have changed the same amount regardless of how many grants they got. That's not what happened. Instead, spending fell less in the states that got more grants. And, interestingly, there was a big multiplier effect: between 2008 and 2011, one dollar of grants increased total highway spending by almost two dollars. Why? Well, Deluc and Wilson explain that federally-funded roads probably create demand for more state-funded roads to connect everything together.

But, in any case, this research shows that infrastructure spending is one of the best ways to fight a slump. We'll have to spend money on our roads, bridges and buildings eventually, so why not do it when interest rates are low and the multiplier effect is high? That saves us jobs in the short-term, and money in the long-term.

The only problem with the stimulus was that there wasn't more of it.