CONGRESSIONAL BUDGET OFFICE STEPS ALL OVER BOEHNER’S MESSAGE…. In his exceedingly silly speech on the economy today, House Minority Leader John Boehner (R-Ohio) proudly proclaimed, “All this ‘stimulus’ spending has gotten us nowhere.”
And almost immediately thereafter, the CBO made Boehner look pretty foolish.
The oft-criticized stimulus plan boosted the economy in the second quarter by as much as 4.5%, the Congressional Budget Office said on Tuesday.
In a report published the same day as Minority Leader John Boehner’s criticism of President Obama’s economic policy, the CBO said the stimulus law boosted the economy by between 1.7% and 4.5%, lowered the unemployment rate by between 0.7 percentage points and 1.8 percentage points and increased the number of people employed by between 1.4 million and 3.3 million.
This seems pretty significant, so let’s look at it from a few different angles.
First, as a real-world matter, economic growth was pretty slow in the second quarter (April to June), but the CBO report makes clear that without the stimulus, it wouldn’t have grown at all. In other words, a stimulus helped lead to tepid growth — the absence of a stimulus would have been significant economic contraction.
Second, this CBO data, like reports from the Council of Economic Advisors and the Office of Management and Budget, should effectively end the debate about whether the Recovery Act did what it set out to do. The stimulus effort was too small — criticism from conservative Republicans is completely backwards — but as designed, it was intended to give the economy a significant boost, and save and create millions of jobs. It did exactly that. Anyone who argues otherwise is either not paying attention or is being willfully dishonest.
Third, the White House would be smart to trumpet the CBO report pretty loudly, especially today, but the same political dynamic that’s existed for months continues to be a problem — the stimulus prevented a catastrophe, and Republicans were spectacularly wrong at the moment of crisis, but the economy is still hurting badly. Saying “it would have been much worse” is entirely accurate. It’s also entirely unpersuasive in a country burdened by fear and high unemployment.
And finally, by way of a reminder as to how truly nonsensical our politics can be, also note that the economy could use another boost to prevent it from slipping even further backwards. The CBO makes abundantly clear that the stimulus worked in generating growth and creating jobs. So, does that mean we’ll get another stimulus to generate more growth and create more jobs? Of course not — Republicans choose not to believe the data, want less of what worked, and won’t allow a vote on the most effective elements of the policy. Voters say they want less spending — even though more spending would improve the economy — and congressional Democrats are unlikely to even try to push for more recovery efforts, fearing a public backlash against sound policies that work.
The stimulus worked, and we need more. The country is convinced it failed, and demands less.
We know what the economy needs; we know how to make it happen; and our politics just won’t let us get from here to there.