The American Reinvestment and Recovery Act isn’t “working” in the sense of producing an acceptable level of unemployment, but all indications are that it really is working—and working quite well—in terms of keeping the unemployment rate lower than it otherwise would have been while also keeping the GDP level higher than it otherwise would have been. In political circles this is a very controversial claim, but as Jackie Calms and Michael Cooper points out in an excellent piece among private sector forecasters there’s a clear pro-ARRA consensus:
“It was worth doing — it’s made a difference,” said Nigel Gault, chief economist at IHS Global Insight, a financial forecasting and analysis group based in Lexington, Mass.
Mr. Gault added: “I don’t think it’s right to look at it by saying, ‘Well, the economy is still doing extremely badly, therefore the stimulus didn’t work.’ I’m afraid the answer is, yes, we did badly but we would have done even worse without the stimulus.”
In interviews, a broad range of economists said the White House and Congress were right to structure the package as a mix of tax cuts and spending, rather than just tax cuts as Republicans prefer or just spending as many Democrats do. And it is fortuitous, many say, that the money gets doled out over two years — longer for major construction — considering the probable length of the “jobless recovery” under way as wary employers hold off on new hiring.
As Brad DeLong points out these are people who need to sell their forecasts to paying clients. They make a living by trying to be credible to people who are trying to exploit macroeconomic information in order to make money. They’re not people who are trying to make a living by flattering the prejudices of donors to conservative political causes or by serving the short-term political needs of conservative elected officials.
The great tragedy of 2009 is that a bill that’s pretty clearly done enormous good but was based on unduly optimistic assumptions is now widely panned as having failed.