Cato scholars aspire to high standards for accuracy and analysis. Because of that, I feel obligated to note an error in Dan Mitchell’s recent post on the ongoing failure of Washington’s economic stimulus efforts.
The politicians in Washington flushed about $800 billion down the toilet and we got nothing in exchange except for anemic growth and lots of people out of work.
About $800 billion? I wish. By my calculation, federal fiscal stimulus efforts for the recent recession are now close to $2.5 trillion—at least.
Of course, Dan had in mind the $820 billion American Recovery and Reinvestment Act that President Obama pushed through Congress within a month of becoming president. But ARRA was just one of several fiscal stimulus bills that Washington adopted, beginning with the February 2008 Economic Stimulus Act and continuing through to early this year. Some of those bills were explicit stimulus measures; others were ostensibly intended to address other policy goals, but were engineered to provide fiscal stimulus by borrowing and spending money now, and then using future government revenues to pay off that borrowing (perhaps when God grants St. Augustine chastity and continence).
Below is a list I’ve kept of these stimulus measures. I use multiple-sequence numbering to differentiate between major and minor legislation.
|#||Name||Stimulus (Billions)||Became Law||Public Law||Note|
|1.0||Economic Stimulus Act of 2008||$167||2/13/2008||110-185||A “timely,” “targeted,” and “temporary” fiscal stimulus.|
|1.0.1||Unemployment Compensation Extension Act of 2008||$5.7||11/21/2008||110-449||Extends unemployment insurance, using borrowed funds so as to provide stimulus.|
|2.0||American Recovery and Reinvestment Act of 2009||$819||2/17/2009||111-16||This package of public works projects, tax breaks, unemployment insurance extension, and other spending would keep unemployment below 8%.|
|2.0.1||Cash for Clunkers Extension||$2||8/7/2009||111-47||Continues the subsidy for new car purchases that was first enacted as part of ARRA.|
|2.1||Worker, Homeownership and Business Assistance Act of 2009||$44.7||11/6/2009||111-92||Extends and expands the homebuyer tax credit program.|
|2.2||Temporary Extension Act of 2010||$8.1||3/2/2010||111-144||Extends unemployment insurance, using borrowed funds so as to provide stimulus.|
|2.3||Hiring Incentives to Restore Employment Act||$17.6||3/18/2010||111-147||AKA the “Jobs for Main Street Act,” this “jobs bill” would “spur job growth and strengthen the private sector.”|
|2.4||Continuing Extension Act of 2010||$18.1||4/15/2010||111-157||Extends unemployment insurance, using borrowed funds so as to provide stimulus.|
|2.5||Homebuyer Assistance and Improvement Act of 2010||$145||7/2/2010||111-198||Extends the deadline for submitting paperwork for homebuyer credit.|
|2.6||Unemployment Compensation Extension Act of 2010||$33.9||7/22/2010||111-205||Extends unemployment insurance, using borrowed funds so as to provide stimulus.|
|2.6.1||United States Manufacturing Enhancement Act of 2010||$3||8/11/2010||111-227||Reduces or suspends various import duties.|
|2.7||Small Business Jobs Act of 2010||$85.4||9/27/2010||111-240||Expands SBA loan programs and provides other small business assistance.|
|3.0||Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010||$916.8||12/17/2010||111-312||A package of tax breaks, including a cut in the Social Security payroll tax, an extension of the Bush income tax rates, and an extension of unemployment insurance.|
|3.1||Temporary Payroll Tax Cut Continuation Act of 2011||N/A||12/23/2011||112-78||Extends the Social Security payroll tax cut, extends unemployment insurance, and other provisions.|
|4.0||Middle Class Tax Relief and Job Creation Act of 2012||$167.6||2/22/2012||112-96||Extends the Social Security payroll tax cut, among other provisions.|
Keep this list in mind when someone says there was “only” $800 billion in stimulus—or when someone says the only reason the stimulus failed is because it was too small.
Post Script(2016): As part of its final Economic Report of the President report, the outgoing Obama Council of Economic Advisers offered a lengthy (and positive) assessment of its handling of the recession, including efforts to fiscally stimulate the economy. The report (p. 34) notes that “Together with automatic stabilizers, the total fiscal stimulus over these four years averaged 4 percent of GDP,” or about $2.5 trillion.