February 2014 – WASHINGTON — Five years after its passage, White House officials and their Republican critics are still fighting over the merits of President Obama’s economic- stimulus law. Later this week, Obama will mark the fifth anniversary of signing the American Recovery and Reinvestment Act. Monday, his Council of Economic Advisers issued a 70-page report lauding the law’s impact. Republicans, meanwhile, seized the anniversary to denounce the law for increasing the federal debt while failing to cure the economy’s troubles. The dispute underlines how important the economic-stimulus plan remains to the central battle between the two parties — the role of government in the economy. As told by Democrats, the stimulus law is a tale of officials using government effectively to shield families from a severe economic crisis triggered by inadequately regulated speculation. In that accounting, the law is a prime example of how a strong central government can help the average person. White House economic adviser Jason Furman said the American Recovery and Reinvestment Act made other targeted investments that will pay dividends for years to come. To Republicans, by contrast, the law provides proof that government spending does little other than to burden future generations with debt. Given the continued weakness in the economy, Republicans have the simpler case to make: Good times have not yet returned, therefore, Obama’s policies have failed.
Florida Sen. Marco Rubio demonstrated the approach in a videotaped message, which he opened by referring to the anniversary of the “failed stimulus program.” “Five years later, underemployment is still too high, the number of people that have dropped out of the workforce is astounding, unemployment remains stubbornly high and our economy isn’t growing fast enough,” Rubio said. “The ‘stimulus’ has turned out to be a classic case of big promises and big spending with little results,” House Speaker John Boehner, R-Ohio, said in a written statement. “Five years and hundreds of billions of dollars later, millions of families are still asking ‘Where are the jobs?’” Senate Minority Leader Mitch McConnell, R-Ky., argued that Obama could put the nation’s finances on a more solid footing and create jobs by taking steps to roll back regulations and finally approve the Keystone XL pipeline project from Canada to the Gulf of Mexico. “Five years later, the stimulus is no success to celebrate,” McConnell said. “It is a tragedy to lament.” As White House officials see it, that argument is not just simple, but simplistic. Financial crises like the one that hit the U.S. in the final year of George W. Bush’s tenure inflict long-term damage on an economy, they note. Comparing policy outcomes with an ideal result — a rapid, sustained recovery that quickly restores the economy to health — poses an impossible test. The correct approach is “comparing what actually happened with what might have happened,” the report from the economic advisers says.
By that standard, the stimulus law succeeded because it “helped avert what might have become a second Great Depression and paved the way for stronger economic growth,” they say. While economic growth still lags behind what most Americans would like, the U.S. economy has recovered more quickly than many major competitors, including Great Britain and France and pretty much on parallel with Germany, they note. Half of the total fiscal support for the economy, or about $689 billion, from the recovery act and subsequent measures was in the form of tax cuts directed mostly at families. The remainder was spent on such things as rebuilding roads and bridges, preventing teacher layoffs and providing temporary help for people who lost their jobs or needed other assistance because of the poor economy. More than 40,000 miles of roads and more than 2,700 bridges have been upgraded, nearly 700 drinking water systems serving more than 48 million people have been brought into compliance with federal clean water standards and high-speed Internet was introduced to about 20,000 community institutions. “While these figures are substantial, they still nevertheless understate the full magnitude of the administration’s response to the crisis,” Furman wrote. He noted that the report focused solely on the effects of fiscal legislation. It did not evaluate other administration policies that aided the recovery, such as stabilizing the financial system, rescuing the auto industry and supporting the housing sector. –Seattle Times