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Five Years Later, the Stimulus Still Isn't Getting Enough Love

Getty Images: Ethan Miller

You know most of the story about the stimulus. President Obama signed it into law five years ago Monday, in a month when the economy would shed nearly 700,000 jobs. White House economists Jared Bernstein and Christina Romer created the infamous graph that showed that, with enactment of the Recovery Act, the unemployment rate would stay below eight percent. That prediction didn’t come true: Unemployment peaked at 10.0%. But that wasn’t because Bernstein and Romer were wrong about stimulus. It was because they—and most of the rest of the country—were wrong about how bad the crisis really was. Naturally, this hasn’t stopped the right from using the graph to show that the stimulus failed.

OK, you know all that. So, what’s new five years after passage of the law? A few things, actually. On Monday, the White House’s Council of Economic Advisors (CEA) released a new report (PDF) on the stimulus—complete with some updated statistics:

  • From 2009 to 2012, the stimulus saved 1.6 million jobs per year and boosted GDP by a cumulative 9.5 percent over that period.
  • More than 160 million families received tax cuts – mostly from either the Making Work Pay tax credit or the payroll tax cut.
  • The stimulus kept more than five million people out of poverty in 2010.
  • Of the projected $832 billion that the Recovery Act will spend through 2019, $804 billion has already been spent, including more than $700 billion from 2009 to 2011.

While these numbers come from the White House, outside analysts have found similar results. Here’s a comparison of the CEA’s findings with those of the Congressional Budget Office:

The CEA’s estimates are a bit on the high end, but both authorities agree—as do the majority mainstream economists—that the stimulus’s effect on the economy was strongly positive.

And numbers don’t tell the whole story. When the Obama administration designed the bill, it did so with a combination of goals. It wanted to get the money out quickly and transparently, obviously, and it wanted to target the money towards policies that would give the economy the greatest boost. But it also wanted to invest in projects that would produce long-term benefits for the country.

Only now are we beginning to see the results of those long-term investments. In his terrific book on the stimulus, Mike Grunwald documents the many under-appreciated ways that law will benefit the country in the future. (He wrote another piece on it today.)

Among other things, production of solar and wind energy has skyrocketed in the past few years. The stimulus allocated money towards 15,000 transportation projects, building more than 42,000 miles of road and repairing nearly 3,000 bridges. It was America’s largest-ever investment in high-speed rail. The Recovery Act created Race to the Top, a competitive grant program that gave states incentives to adopt tougher academic standards for K-12 students. It upgraded or installed high-speed broadband internet for rural communities across the country. Hospitals have used stimulus money to speed the adoption and use of electronic health records.

Should the Recovery Act have been larger? Sure. And a few people, like Paul Krugman and Joseph Stiglitz, made the case at the time. But that would have been difficult, and quite possibly impossible, given the lack of political support on Capitol Hill. And even if the program wasn’t big enough to create a strong recovery, it saved the country from a second Great Depression while funding transformative programs that will benefit America for decades to come.

As Vice President Biden, who oversaw the Recovery Act, might have put it, that’s a big f***ing deal.