The American Spectator : The Spectacle Blog : Stimulus Success?

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David Leonhardt's column from yesterday's New York Times that argued that the Obama stimulus "really worked" has, predictably, drawn gloating from left-wing commentators ("IT WORKED" is the Huffington Post's headline).

Setting aside the question of what it means to say that the stimulus "worked" better than other potential policy options -- although if you are interested Reihan Salam offered some relevant thoughts -- let's look at the arguments Leonhardt provides for the claims made by the headline, "Judging Stimulus by Jobs Data Reveals Success."

First Leonhardt references the reports from various economic research firms that indicate that the stimulus generated roughly 1.5 million more jobs than there would have been in its absence. This is not news -- in fact the Times ran a similar article affirming the stimulus's success based on these same firms' judgment back in November. Furthermore, the researchers in questions -- IHS Global Insight, Moody's, et al. --all employ standard macroeconomic models, similar to the Congressional Budget Office's, that do not make use of new data to examine the stimulus's impact. Instead, they use historical effects of government spending, apply the amount that the feds spent this time, and use the resulting number as their best guess.

Then Leonhardt presents two kinds of evidence that he thinks should prove "hard-core skeptics" misguided. The first is "the basic narrative that the data offer. Pick just about any area of the economy and you come across the stimulus bill's footprints." Specifically, he cites increased state and local government, corporate, and consumer spending. Of course, whether or not increased government spending is helpful is certainly a question in itself where "hard-core" skeptics are concerned. And he presents no evidence that corporate and consumer spending increase are attributable to the stimulus other than the fact that Mark Zandi of economy.com says so.

The second kind of evidence, according to Leonhardt, is that according to a paper by Carmen Reinhart and Kenneth Rogoff, our recession, because it features a financial crisis, is supposed to keep unemployment rates rising until 2012, but "the jobless rate is now expected to begin falling consistently by the end of this year."

I'm sorry, expectations are not data.

So to summarize: Leonhardt's article contains no new evidence indicating that the stimulus has "worked" (or failed, for that matter). He's glossed over larger questions about what it means in the long run for the stimulus bill to be successful, begged the question about government spending's usefulness entirely, and presented speculation as "data." I wouldn't even consider myself a "hard-core" stimulus skeptic, and yet I find this new evidence underwhelming.

But I can't help notice that the article is very useful for the administration's purposes. No wonder that ABC's Jake Tapper tweeted, this morning, "WH loves this NYT David Leonhardt piece on stimulus... it's been emailed 787 billion times to me (+ Gibbs tweeted it)"

View all comments (21) | Leave a comment

Julia Spinola| 2.17.10 @ 12:22PM

I have never read a less substantive opinion piece (?) than this one right here. This data that was accumulated based on INDEPENDENT economic research firms on the one year anniversary of the stimulus bill. The misrepresentations and lies of the right wings faction, conservative infomercials, while seemingly effective generating fear instead of hope and innovation to the masses, will be proven to be a giant hoax on America by corporations and those who are afraid to lose power. I would venture to look into how many businesses have been started due to the layoffs, as well. America's entrepreneurial spirit has been underreported by those who would rather dress up and sit around having tea parties.

Indiana Alex| 2.17.10 @ 12:33PM

Yes, America's entreprenurial spirit is best represented by - - - wait - - - massive government spending?

There are plenty of studies that suggest that excess government spending produces miserable economic results, including during The Great Depression. Of course we could just look out across the landscape and see the same.

AJsDaddie| 2.17.10 @ 1:43PM

I can't help myself... you are actually arguing that the stimulus is working because people are being laid off and starting new businesses? You're serious? Although I know of almost nobody embarking on this fantastic entrepeneurial adventure (other than perhaps selling their possessions at the local flea market), the premise is simply absurd on its face. If the economy was healthy, new businesses would be started not by people laid off but by people looking to take advantage of that burgeoning economy, and thus choosing to leave their employed positions.

To say that new businesses from layoffs are a good result of this economic tsunami is akin to saying that getting a limb blown off is a wonderful occurrence because it makes you better at tying a tourniquet.

As the contortions grow, the Liberal position looks more and more ridiculous.

Matthew Huntley| 2.17.10 @ 3:36PM

"Businesses started due to layoffs"?!? Are you serious? You mention that the data was based on independent research, ok, but the author's issue was the data was not WHO it was generated by, but on what it was based.

Hope and innovation are lovely things, but you can't feed a family on hope, and spending the entire nation's way further into debt than it already was isn't innovation. . .it's just more of the same.

Ronten| 2.17.10 @ 1:40PM

787 Billion/1.5 Million + $524,666 per job.
If you just hired some people at $40K per year you could have employed 3,935,000 people for 5 years.
Economy improving soon? No post WWII recession has ever lasted more than 24 months, so wouldnt the recession show signs of ending by now anyway?

Reginald Perrin| 2.17.10 @ 3:47PM

Except of course that the $787b stimulus was not all spending. Approximately 1/3 of it was tax cuts, insisted upon by Republicans who now claim the stimulus was ineffective -- meaning they admit that tax cuts don't stimulate the economy? And perhaps no post-WWII recession has endured this long because no post-war administration screwed things up as badly as the Bush II Administration.

Todd| 2.17.10 @ 4:13PM

What tax cuts are you talking about? Tax credits for people who don't pay taxes anyways are not tax cuts in my book but increased welfare. Those are the only "tax cuts" a Marxist like Obama will ever approve. And yes, those "tax cuts" do nothing to stimulate the economy like cutting personal income tax, capital gain and corporate tax rates have always done from when Kennedy, Reagan and Bush have done so. Has is the kool-aid tasting these days Reginald? Getting more like warm piss by the day.

I did appreciate Tapper's sarcasm about having the rubbish NYT's article sent to him 787 billion times, nice to know there is one reporter at The WH that you can count on for honest reporting instead of regurgitating WH talking points.

Todd| 2.17.10 @ 4:18PM

How not has

Pete| 2.17.10 @ 5:35PM

Might you be interested in some oceanfront property I am looking to sell in AZ?

dac| 2.17.10 @ 1:41PM

Ms Spinosa: My 8th grade English teacher would have failed you, as you're unable to comprehend a simple piece of writing. Let me simplify for you: the fact of "Independence" proves nothing; the substance of the "independent" reports was in fact, lacking, fluffy, and irrelevant to the point they were trying to prove. Would you care to compare the unemployment rates pre- and post- "stimulus"? Those rates are the government's own figures, and they speak loudly. Nobody who runs a private business, and nobody who knows anyone who runs a private business, believes that the "stimulus" amounts to anything more than feathering the beds of Obama's union and political allies. There is no incentive for private businesses to hire anyone or generate wealth, because they quite reasonably believe that the continued response from the statists running our government will be to regulate, tax, and/or confiscate. Until that simple calculus changes (meaning, the statists' iron grip on government is weakened or broken), there will be no economic recovery of any kind (except, as has been amply chronicled in these and other pages, in the number of new government employees). Wake up, take a remedial reading comprehension course. It will help you understand reality if you're so inclined.

Reginald Perrin| 2.17.10 @ 3:55PM

I had to respond to this sentence -- "Nobody who runs a private business, and nobody who knows anyone who runs a private business, believes that the "stimulus" amounts to anything more than feathering the beds of Obama's union and political allies."
Of course they don't believe it, because their beliefs are independent of fact.
I work in public finance, and I can tell you that the stimulus has, in fact, created or saved thousands of jobs in my state as government-funded projects required the hiring of private contractors for all kinds of projects, mainly relating to roads and water/wastewater systems. I can point to literally hundreds of projects that would not have been funded without ARRA, and all of which required the hiring of private sector contractors for the work, leading to sustained or added private employment.
Furthermore, your sources may "believe" that " the continued response from the statists running our government will be to regulate, tax, and/or confiscate" but why don't you identify any additional regulations or taxes that have been imposed on business by the Obama Administration? Because there are none, and business taxes have actually been cut. (Not much, but they haven't been raised -- they've been cut. ARRA included over $225b of tax cuts.).
Your sources' "beliefs" are untethered to any facts, and are not worthy of belief by me.

reginald perrin| 2.17.10 @ 4:06PM

You also might be more polite to Ms. Spinosa. You don't show polisci skills that are significantly better than hers. You attack data and reports you regard as unreliable not with better date, but with "beliefs" and from loose anecdotal evidence. If you have better statistics showing that the Times piece is wrong, produce them. Don't just rely on the mutterings of your liberal-hating friends. MY eighth-grade social studies professor would be appalled!

Ellis Wyatt| 2.17.10 @ 5:43PM

Perhaps some short term, low value jobs were created. But they came at the expense of many more high value, long term jobs being created in the private sector. When you remove capital from the system and place punitive taxes, higher interest rates, and over bearing regulation (see epa, debt, and the coming tax increases, such as the expiration of the so-called Bush tax cuts, that will have to be put into place to pay for this reckless spending) on the very entreprenuers that create jobs in this country you are causing far more harm than good. You ask to be quoted specific tax increases Obama has enacted. The private sector is forward thinking and must anticipate the future. To counter your public employment, I work in the private sector and I can tell you that until the uncertainty of this administration is over we are not investing in new employees or significant capital projects. It just doesn't make sense.

So, sure government can create make work jobs, but it cannot create wealth. We are poorer as a nation due to this job killing failure called a "stimulus". Heaven help us if Obamacare or cap and trade were to become law.

Patrick Glenn| 2.17.10 @ 6:50PM

Reginald, if the $787 billion public investment in the "stimulus" had not resulted in some jobs being "saved" or created, then there should have been a criminal investigation of this program. Ugh, wait . . . that would never happen. Anyway, the question is: How much bang for the buck - er 787 billion bucks?

Let's see: Jan. 2009 unemployment rate = 7.6 percent. Jan. 2010 unemployment rate = 9.7 percent, and that doesn't even account for increase in those who are discouraged, no longer looking for work. Sounds like a great investment to me.

But, apparently, if Reginald ever invests in a fast food franchise that loses money, he will be impressed when his manager tells him that the franchise would have lost even more money under different management. Reginald, I have a project you might want to go in on . . .

Loadmaster| 2.17.10 @ 1:50PM

The "spin" is part of the game. If you get enough "spinners" then you can get more "believers". The MSM will never question them and they know it. Even Jake doesn't have the "johnson's" to put Gibbs or the admin in the hot seat. No real journalist are left and America be damned.

Reginald Perrin| 2.17.10 @ 4:14PM

Thanks for the link to the Salam piece. It does a much better job of pointing out the criticisms of the Times piece, and of the stimulus in general.

Oldefarte| 2.18.10 @ 10:51AM

This government stimulus that essentially maintains/preserves state/local employment ONLY is about as successful as A SCREEN DOOR IN A SUBMARINE!!!!!

christine| 5.26.10 @ 12:45AM

Obama over the past year has looked at one of the greatest problems that our world has ever been confronted with. He used environmental issues to create jobs for Americans even though it cost a lot of money he viewed it as a benefit in the long run. He created programs that raised awareness and helped with the “Green Movement”. This can be related back to the article Green, Greener, Greenest. The reason is because both articles promote and raise awareness about environmental issues, what people can do for the environment and how they can get involved. I think that choices that Obama makes are in the best interests of our country, economy and environment. Backlinks

MiniCab London| 6.30.10 @ 11:32AM

all indicators show that the US will be the first country to bust the credit-crunch crisis.

Tom| 8.4.10 @ 9:09PM

This can be related back to the article Green, Greener, Greenest. The reason is because both articles promote and raise awareness about environmental issues, what people can do for the environment and how they can get involved. I think that choices that Obama makes are in the best interests of our country, economy and backlinks environment.

NEIL| 7.29.11 @ 10:18AM

Obama used environmental issues to create jobs for Americans even though it cost a lot of money he viewed it as a benefit in the long run.
Creating a cleaner greener environment being one benefit and giving hard working americans their jobs back and their pride along with it.