"Barack Obama’s economic record" at the Economist

[applegrove]

Barack Obama’s economic record

End-of-term report

at the Economist

http://www.economist.com/node/21561909/print

"SNIP.................................

Sluggish growth since 2009 has fed opposing assessments of the $800 billion American Recovery and Reinvestment Act. Conservatives say stimulus does not work, or that Mr Obama’s was badly designed. Most impartial work suggests they are wrong. Daniel Wilson of the Federal Reserve Bank of San Francisco inferred the stimulus’s effect through an analysis of state-level employment data. He concluded that stimulus spending created or saved 3.4m jobs, close to the CBO’s estimate (see chart 1).

Charges that the plan was made up of ineffective pork are also unfair. Roughly a third of the money went on tax cuts or credits. Most of the spending took the form of direct transfers to individuals, such as for food stamps and unemployment insurance, or to states and local governments, for things like Medicaid.

Liberals make the opposite case: the stimulus was too small. Ms Romer originally proposed a package of $1.8 trillion, according to an account by Noam Scheiber in his book, “The Escape Artists”. Told that was impractical, she revised it down to $1.2 trillion. Mr Obama eventually asked for, and got, around $800 billion. Some critics note that this was too small relative to a projected $2 trillion shortfall in economic activity in 2009 and 2010. But it was far more than Congress had ever approved before. Despite the Republican takeover of the House of Representatives in 2010, Mr Obama eventually got nearly $600 billion of further stimulus, including a two-year payroll-tax cut.

If stimulus worked, why has the recovery remained so sluggish? GDP has grown by just 2.2%, on average, since the recession ended in mid-2009, one of the slowest recoveries on record. For one thing, the economy hit air-pockets in the form of higher oil prices, caused partly by the Arab spring, and the European debt crisis. Moreover, from the fourth quarter of 2009, state and local belt-tightening more than neutralised the federal stimulus, according to Goldman Sachs (see chart 2).

....................................SNIP"

[Samantha]

1. Some time after the stimulus was applied

economists came out and said the amount needed was totally underestimated because we did not have the tools at the time of the crash to measure the actual depth. In other words, the depth of the hole created far exceeded the outer limits of our ability to measure it, that is how incredibly deep it was. Since that realization, adjustments have been made. But that is the reason why the overall amount fell short of expectations. Although, I do heartily agree what was done was sorely needed. We need another one, along with a Democratic House and Senate to ensure passage.

Sam

[applegrove]

2. I totally agree.

[Squinch]

3. Good God! We don't need to guess anymore!

We have 4 years of data that shows that the countries that went all in for stimulus for the middle class (i.e. Iceland) are having nice recoveries. Countries that went for austerity (i.e.pretty much all of Europe) are back in recession. The country with the half-assed stimulus offset by cuts to state and municipal jobs (i.e. the US) got a half-assed recovery.

We know what needs to be done. Iceland also let the banks fend for themselves, forcing their owners and bondholders to take the losses on their bad debts. That sounds nice to me.

[applegrove]

4. I thought it was a good survey of all Obama has done and would make

a good resource for those DUers who have relatives or friends who are GOP or independants.

[Squinch]

5. I agree. Didn't mean to imply that I didn't.

[jmowreader]

6. The problems with the stimulus are easy to see to anyone with a brain

It was:

At least too small by half

and

Was half tax cuts.

[Cosmocat]

7. state and local belt-tightening more than neutralised the federal stimulus

THIS is BY FAR the most understated of all the crape the GOP has pulled the last four years.

PA slammed school district funding, and lost countless teacher jobs.

How many GOP controlled states like Wisky saw a loss in public sector jobs?

I have seen estimates that the unemployment rate minus the purge of these jobs having the unemployment rate be in the low 7s.

How ANY public sector person can vote R is beyond me.