Despite High Unemployment, Stimulus Had Better Jobs Impact Than Reported
Budget authority investigation sheds light on Stimulus with review
While lawmakers continue to debate what impact President Obama’s stimulus funding had on the economy, and Republicans still claim that it failed to create jobs, the nation's highest budget authority is saying the stimulus created millions jobs more than originally reported.
This week, the Congressional Budget Office (CBO) released a review of the American Recovery and Reinvestment Act (ARRA) -- the stimulus act -- and found that it had a more beneficial impact on the economy than ARRA officials themselves have reported.
The CBO report estimates that the stimulus helped employ close to three million people as of this summer. It also found that working hours were increased thanks to ARRA, stopping people from being reduced to part-time worker status. The budget authority was able to look above and beyond reports submitted by ARRA grant and loan recipients to determine the stimulus' impacts on the job market.
At the urging of President Obama, the Recovery Act was passed in 2009 by Congress as a direct response to the economic crisis. It provided close to $800 billion in grants, loans, and tax credits to create new jobs and save existing ones. Recovery Act recipients are required to report the number of jobs produced and saved as a direct result of the funding. The Recovery Accountability and Transparency Board uses those numbers to determine the total jobs impact, and as of July 2011 they reported 550,000 jobs from the stimulus.
However, the CBO was able to do a more comprehensive analysis to figure in the jobs created indirectly from stimulus funding. Looking at the multipliers, the CBO was able to provide numbers on the total job supply, including jobs indirectly supported by stimulus funding.
For example, a contractor in your neighborhood may have landed a $1 million stimulus grant to create 50 jobs. Each of the people employed from that funding then goes out and buys food at grocery stores, eats at restaurants, buys clothes for work, pays for transportation to get to work, all of which supports jobs at the places that provide those goods and services.
In that respect, according to the budget authority ARRA has “succeeded in its primary goal of protecting the economy during the worst of the recession.” At the Recovery Act’s peak performance -- the end of 2010 -- it helped create between 1.4 million and 3.6 million jobs -- jobs that surely would not have existed without it.
What is depressing is that the unemployment rate has shown little movement, hovering around 9% since April. The economy has clearly been bleeding off more jobs than the stimulus has been able to bandage.
Most Democrats and economists agree that the stimulus helped prevent the U.S. from falling into a second Depression. Numbers don’t lie, though, and Obama’s presidency in some ways rides on how effective it was, real or perceived.
The budget authority is clear on the stimulus' impacts, though, saying, “Without ARRA, millions more workers would be either unemployed or struggling to get by on less income.”
To read the full report go here.