Chart of the Day: Why the Stimulus Didn't Work

[n2doc]

— By Kevin Drum| Tue Mar. 22, 2011 9:13 AM PDT
Why did the 2009 stimulus package produce such meager results? Partly because the recession turned out to be worse than Obama's team thought, and partly because they didn't press for a big enough package even for the recession they thought we had. But another reason is that at the same time the feds were spending more money, state governments were cutting back. The chart below from CBPP tells the story. They have data for all but six states, and on average for 2012, "those 44 states plan to spend 9.4 percent less than their states spent before the recession, adjusted for inflation." That's not just less than last year, it's less than 2008. That wiped out nearly the entire effect of the federal stimulus pacakge.



http://motherjones.com/kevin-drum/2011/03/chart-day-why-stimulus-didnt-work

[rfranklin]

1. It is part of the Republican plan to reject funds and make the stimulus fail...

making their constituents suffer while blaming Obama and the Dems so they could gain political advantage.

[pscot]

10. The republican plan to make the country fail

[thereismore]

2. Very telling. Thanks. nt

[Common Sense Party]

3. DAMN those penny-pinching states and their anti-American balanced

budgets!

[Mojorabbit]

8. Yes, lots of state laws call for that and it should have

been taken into acct when numbers for the stimulus were put out there in the beginning.

[The_Casual_Observer]

4. What if there hadn't been a stimulus? It appears that things would

have been much worse.

[n2doc]

5. Yep. But people can't grasp that. And they can't compare it, either

They can only see that things remain crappy, and blame the stimulus for "not working". If you don't have a job, or have lost your house, it is hard to be enthusiastic about the stimulus.

[Tansy_Gold]

7. It wouldn't have made any difference either way,

because the stimulus didn't -- and couldn't -- address two issues driving the "recession."

1. A consumer economy -- which ours is -- cannot survive if it buys all its consumer goods from another economy. In other words, whatever "stimulus" money was pumped into our economy didn't stay there long enough to do any good; it was spent on consumer goods from China and oil from. . . everywhere else.

2. The tax structure that is favorable to unearned income and property and unfavorable to earned income necessarily and by design funnels additional wealth upwards to the already wealthy and pulls it out of the domestic economy.


Neither of those issues was ever addressed by the "stimulus" package and therefore it could not, no matter how big it had been, resolve the problems. All it did was put more money into the hands of the already wealthy, less money into the hands of the poor, and fewer jobs into the lives of the working classes. I believe that's called EPIC FAIL.



Tansy Gold, who really has no idea where "epic fail" comes from but knows one when she sees it.

[Old and In the Way]

6. I guess when voters elected politicians invested in making government fail,

we shouldn't be surprised in the results. They'll get no jobs and no help from the Republicans. Can't really blame the Republicans...it's not like their agenda isn't known. I blame the voters who think that voting for more of the same will produce different outcomes.

[angryfirelord]

9. I wouldn't call it a failure yet

It may have been too small, but I think we can agree that it at least helped provide some kind of cushion against the recession. The bill itself contains a lot of sections and it's worth reading the wiki page.

http://en.wikipedia.org/wiki/American_Recovery_and_Reinvestment_Act_of_2009

Keep in mind that unemployment in the Great Depression shot up to 25%. While it's bad now, we are at least fortunate that there is a welfare state to fall back on. I couldn't imagine the horror of being unemployed with nowhere else to go in the early '30s.

The big problem today though is that we're getting hit with a double whammy. We're seeing the stimulus starting to taper off and we're also seeing the newly elected GOP governors use the budget crisis as a way to push their own agenda through. Not in terms of balancing budgets, but in specifically attacking certain public sectors as a excuse as balancing the budget.

[snot]

11. Was part of the problem also that the stimulus mostly went into the wrong pockets?

I.e., relatively little direct job creation, and relatively more tax cuts to the rich or to corps. likely to hoard it?