The stimulus package turns one today. Happy birthday!
Has the stimulus been a success? On the macroeconomic level, it's too soon to sell. Yes, White House economics adviser Christina Romer last month said that the stimulus had created 1.5 million to 2 million jobs. And you don't have to take it from the White House, David Leonhardt recently wrote in the New York Times: "Perhaps the best-known economic research firms are IHS Global Insight, Macroeconomic Advisers and Moody's Economy.com. They all estimate that the bill has added 1.6 million to 1.8 million jobs so far and that its ultimate impact will be roughly 2.5 million jobs."
The stimulus has also been quite successful on a political level—even if the polls don't necessarily show it. Consider that it was essentially a Democratic undertaking. Every Republican member of the House and all but three Republican members of the Senate voted against it. And since its passage there have been continued calls for ending it. In the wake of the bill's passage, Republicans as one stood up to say that the stimulus must fail (at least the non-tax-cut part of it) because it was axiomatic that government spending could not create any jobs—never did, can't, won't. As Michael Steele put it: "Let's get this notion out of our heads that the government create jobs. Not in the history of mankind has the government ever created a job."
That argument was wrong in theory—and now it is also clearly wrong in practice. And the very Republicans who voted no on the stimulus are clamoring to take credit for stimulus spending. And many of the Republicans who voted against the stimulus (on the grounds that it couldn't create jobs) have since petitioned government agencies on behalf of their states and districts to get stimulus funds—on the grounds that it would create jobs. (Rachel Maddow of MSNBC had a particularly good listing of the culprits here.)
The stimulus has also been politically successful in that it has helped fund popular entitlements. Much stimulus spending has been on Medicaid—in effect an effort to help state governments, run by Democrats and Republicans alike, cope with the rising costs of dealing with people left uninsured or underinsured by the economic downturn. It's very difficult to find anybody—in the health care industry, in state or federal politics—who argues that we'd be better off if state and federal health care programs had less money to spend. In fact, it's become an article of faith for Republicans that spending on Medicare can't be reduced in any way, shape, or form.
So in the year since the stimulus bill was passed, it's become more and more difficult for opponents to make the case against it. And that opposition will get tougher still, because the stimulus has barely kicked into gear. The package was designed to be rolled out over a three-year period, in part because of logistics (it's tough to approve tens of billions of dollars of loan guarantees to wind-energy farms and solar power arrays in a few months) and in part because of politics. Recovery.gov shows that only about one-third of what has been budgeted for tax breaks, new spending, and entitlements has been spent. While Congress' horizon extends only as far as November 2010, the Obama administration is looking ahead to November 2012. Congressional Democrats would have preferred a frontloaded stimulus that spent everything in 2010; the White House isn't particularly troubled that large chunks of the stimulus won't hit the economy until 2011. Thanks to the stimulus bill, there's still $515 billion worth of tax cuts, contracts and loans, and aids to entitlement programs set to enter the economy in the next two years. That will contribute powerfully to growth in 2010 and 2011.