Is the Recovery Act a Failure?

Crosscut buries the lede a little bit on this story about health care and energy policy. It’s really a roundabout story on the “failure” of the recovery act:

Worse, what was passed on a party-line basis had little to do with immediate economic stimulus, since much of the package consisted of Members’ wish lists backlogged during the Bush years. In hindsight, Obama might wish the stimulus package had not existed. It has not created the jobs or growth he promised. Its impact will not be felt in the economy until after recession has ended next year.

So, is the Recovery Act a “failure”? I suppose you have to start by first figuring out what the metrics of success are. I’ll put out a few:

  1. Creating/saving jobs
  2. Pulling the economy out of the recession
  3. Doing #1 and #2 quickly
  4. Developing the infrastructure that will lay the groundwork for future economic growth

Probably a bunch of others as well, particularly when you look at specific pots of money or recession-related issues.  But, just based on these, how’s it going?

Well, you know how I feel about #4, which is that stuff like broadband and health IT and maybe even high speed rail (even though these are all just downpayments on a much bigger investment) are good regardless of timing.  And I’m not sure if you can argue #1, at least yet; the supposedly objective and accurate government accountability agencies did their analysis and projected that lots of jobs would indeed be saved and created.  Mabye they were wrong, but it’s too soon to tell.

#2 is important, but I wonder how reasonable it is.  I mean, $787 ain’t nothin’, but compared to the size of the overall GDP, the depth and complexity of this recession and the fact that economic cycles just happen and usually you can’t just make them go away, what were the realistic expectations for how this legislation was going to affect things.  Especially because it’s only part of a broader approach which includes bailing out banks and preventing foreclosures.  Which leads me to #3, another expectation that is difficult to truly quantify “how soon is soon enough”.

Another way to look at the Recovery Act is to say “what would the economy be like right now without it (#1&2),” “what would the economy be like in a year without it (#3),” and “what would the economy in ten years look like without these current investments (#4)”?  I wish I had an answer, and I’m sure you could create various economic models to guess at it.  I’d be very interested in other people’s (objective) opinions, though!

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One Response to Is the Recovery Act a Failure?

  1. Chris Robbins says:

    It is hard to measure job growth from the current stimulus package as we are still clearly in the grips of a recession and a net jobs loss is to be expected. Could the Obama plan be responsible for some of the positive signs that have been seen in the markets and indicators lately? Perhaps – however, the true effect of the stimulus likely won’t be clear until the end of the summer, if at all. One thing I do know is that infrastructure projects are going up in my area and in some of the surrounding states, and all you have to do is drive by to see that there are people at work thanks to the stimulus.

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