Many questions still remain on the effectiveness of the stimulus act.

As the US inches closer to being in default many are wondering if the multibillion dollar stimulus worked. That answer seems to depend on which side of the political spectrum one is on. Ask Obama and he’ll say yes, ask the congressional Republican leadership and surely you’ll get a no. However, there are clear facts that sort out the political claims.

First, the American Recovery and Reinvestment Act of 2009, colloquially known as the stimulus, must be evaluated for what it was created for. It was designed to save and create jobs. It was also written to create economic growth and increase accountability and transparency in government spending. Lastly, the stimulus was designed to be a multiyear spending package, designed to reduce the likelihood of a double dip recession.

The act has already created two million jobs, while in the year that the law has been in place two million jobs have been lost. The stimulus act did not create new net jobs. However, it kept two million workers off the unemployment rolls, and it helped to remove the economy from the worst of the recession.

Accountability has also been present. The bill required the creation of Recovery.gov, a website that enables citizens to track and for data geeks to more deeply analyze data that can shine new light on spending.

The multiyear stimulus is still in progress. Many of the infrastructure projects will start this summer, providing more construction related jobs. The stimulus money is less than half spent, leaving plenty of opportunity for more help to a hurting economy.

There is also confusion over what the stimulus did. The stimulus money never went to banks. A January CNN poll found there was much confusion about the bank bailout and the stimulus. Over half of Americans believe the stimulus money went to “bankers and investors.” In fact the only institutional bailout in the stimulus was towards cash strapped states.

The so called bank bailout, which is technically known as the Targeted Asset Relief Program was a separate piece of legislation, initiated by the Bush administration, and cost about $700 billion. Most would think spending money on infrastructure projects, which creates many jobs for the working class, is good. Handing billions to irresponsible bankers? Not so popular. No wonder politicians like Sarah Palin have said the stimulus was loaded with “corporate giveaways,” linking it with the highly unpopular bank bailout.

The stimulus has succeeded in creating and saving jobs. Billions have gone to state and local governments, allowing them to preserve jobs, such as teaching, that otherwise would have been axed as local governments deal with income problems of their own.

However, despite the bill’s successes Republican opposition has been strong. Former presidential candidate Ron Paul criticized the bill for “accomplishing exactly what it was intended to accomplish – grow the government.” While there has been growth in the government to properly oversee the disbursement of the funds, most of this money has gone directly to states and private contractors working on a myriad of projects. The goal of the stimulus act was not to create a super government, with the populace dependent on government jobs. Its end result has not been that either.

Even more outlandish is the claim made by groups such as Americans for Tax Reform who say the stimulus has increased unemployment. This is simply untrue. Even without counting the private sector jobs created, thousands at the state level have been saved by increased funding in areas such as education.

The basis for ATR’s belief that the stimulus has only stimulated the government is a Congressional Budget Office report that said 80 percent of ARRA dollars went to programs like student aid, unemployment benefits and social security. This money in no way “stimulated” the government but transferred it to people that were likely to put the money immediately back into the economy. Students, the unemployed seeking work and the social security dependent likely spent the vast majority of their money. It went back to businesses, and that is how an economy grows.

Being just a year into the multi-year stimulus makes it too early to judge its fruits, but the stimulus so far looks successful. Two million jobs have been saved, government spending is more accountable and transparent and last quarter the economy grew nearly six percentage points. That sounds like a law that is meeting its goals.

By: Joshua Davis

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