It has been a year since the economic stimulus package with a price tag of $787 billion was signed into law. There is much disagreement concerning whether the package has helped the economy, hurt the economy or not made a noticeable difference in the economy. In the last week the White House has spent a lot of energy defending the stimulus package but that hasn't affected the perception of the American public. A recent poll found that only 6 percent of those polled believed that the stimulus package had created jobs while 48 percent doubted that the package would ever create any jobs.
When originally campaigning for the economic stimulus package, President Obama estimated that if the package was passed the unemployment rate would not rise above 8 percent and that 3.5 million jobs would be saved or created within two years. However, as we consider the outcome of the first year we find that unemployment which had risen above a national average of 10 percent and currently remains at 9.7 percent and the economy has instead lost three million jobs we have to doubt the success of the stimulus attempt. As Senate Republican leader Mitch McConnell put it, “In the first year of the trillion-dollar stimulus, Americans have lost millions of jobs, the unemployment rate continues to hover near 10 percent, the deficit continues to soar and we're inundated with stories of waste, fraud and abuse.”
Examples of such waste, fraud and abuse are the money spent on the study conducted to research the sex lives of female college students and the $2.8 million that was earmarked for fighting wildfires but instead was given to the District of Columbia for a program to promote green jobs. When the Director of Communications for the White House stimulus website was asked why reports show that stimulus funds were given to hundreds of non-existent congressional districts Ed Pound replied, “Who knows, man, who really knows?”
On the positive side, Vice-President Biden claims that the package has added several percentage points to the gross domestic product growth for the months from April to December of 2009. Also, President Obama claims that two million jobs were saved or created in 2009 and that the stimulus package saved America from sinking into a much deeper recession.
The Congressional Budget Office claims that the stimulus package has already costs us $75 billion more than was originally budgeted bringing the current total cost to $862 billion. This increase includes $21 billion for unemployment with the rest of the $75 billion spent on food assistance and to help states and local governments pay interest on the government bonds they had issued and to keep from laying off government workers. Logically, it seems that this over-spending is proof that two million jobs were not created from the package because if they had been we would have needed to pay less not more toward unemployment.
The stimulus money was supposed to be spent on tax cuts, payments to states, for safety net programs, and to invest in America's future through clean energy and infrastructure programs. Most payments to the states and safety net programs have already been dispersed which means that most of the stimulus money in the second year of the package will go toward the investments. This has already begun by the announcement of $1.5 billion for the Department of Transportation to use for certain projects.
The first year of the stimulus attempt wasn't really about stimulating job growth but rather about attempting to lessen the shock of the recession by maintaining the status quo. If the Obama Administration had claimed that as their objective they might have been considered successful but by claiming that job growth was their aim they have shown the stimulus to be impotent because it did not create jobs.
The White House and Congress are looking toward yet another large stimulus attempt to get the economy going. President Obama said, “Millions more are struggling to make ends meet. So it doesn't yet feel like much of a recovery. And I understand that. It's why we're going to continue to do everything in our power to turn this economy around.” The added stimulus package will double the stimulus funds from the original amount of $787 billion over ten years to around $1.5 trillion over ten years. This increase obviously has many concerned over the ballooning deficit and how that will effect the economy for decades into the future.
