Wednesday, October 3, 2012

Admit It GOP: Obama's New Deal Worked

President Barack Obama signs the American Recovery and Reinvestment Act while VP Joseph Biden looks on.
February 17, 2009,  Denver Museum of Nature and Science, Denver, Colorado.

Foreign Policy magazine has published this detailed and very interesting article by Michael Grunwald:

Think Again: Obamas's New Deal , Michael Grunwald, Foreign Policy Magazine, Sept/Oct 2012.

For starters, there is voluminous evidence that the stimulus did provide real stimulus, helping to stop a terrifying free-fall, avert a second Depression, and end a brutal recession. America's top economic forecasters -- Macroeconomic Advisers, Moody's, IHS Global Insight, JPMorgan Chase, Goldman Sachs, and the Congressional Budget Office -- agree that it increased GDP at least 2 percentage points, the difference between contraction and growth, and saved or created about 2.5 million jobs. The concept of "saved or created" has inspired a lot of sarcasm -- Obama joked after his 2009 Thanksgiving pardon that he had just saved or created four turkeys -- but it simply means 2.5 million more people would have been jobless without the Recovery Act. The unemployment rate might still be in the double digits. (Michael Grunwald)

Another interesting bit of economic news last week was the report that a survey of economists shows that most economists think the stimulus approach to solving the economic problems caused by the Great Recession is the correct approach:

The National Association for Business Economics has put out its new policy survey, and there are some interesting tidbits in there: most economists, for example, are happy with current Federal Reserve policy. And they'd rather the government focus on stimulus for the time being, and save the real deficit cutting for a year or two down the road. Survey: Economists happy with Fed action, NPR Marketplace, September 24, 2012.

Also, here is an older but equally interesting analysis of non-partisan studies of the effect of the ARRA on the economy:

Did the stimulus work? A review of the nine best studies on the subject, Dylan Matthews, Washington Post wonkblog, August 24, 2011.