The Continued Debate: Is the Stimulus Working

Daniel Gross writes for Slate that critics of the Stimulus plan aren’t giving it enough time to work.

As was planned from the start, in fact, only a small portion of the $787 billion has been spent. The Council of Economic Advisers recently issued a comprehensive report on the impact of the stimulus. “As of the end of August, $151.4 billion of the original $787 billion has been outlaid or has gone to American taxpayers and businesses in the form of tax reductions,” the CEA reports. That’s 19 percent. If projections made for September expenditures are right, “between one-fifth and one-quarter of the total $787 billion” was spent by the beginning of October. […]

In other words, nearly eight months after its passage, a large majority of the stimulus has yet to start impacting the economy—as was the plan. And as was also the plan, the most visible parts of the stimulus are only taking effect now and will remain active through 2010.

Here’s the thing. Yes, the stimulus money is just starting to be spent in big chunks. Yes, it was known from the beginning that it would take a while to get the program off the ground. But… that’s what we argued back in February when this thing was being debated. We argued that it would take too long for this spending to get in place. In the meantime, the economy has started on a path towards recovery all on its own. But we might get a W or VVV shaped recession because of the stimulus spending. That is the main critique.

Ironically, the whole Gross argument that we need to give the stimulus time because that was whole plan totally misses that, in a way, it wasn’t the whole plan. The projections from the stimulus designers said that with the stimulus, unemployment wouldn’t get past 9% and would be declining right now. That hasn’t happened. So the plan has been a failure thus far on its own defined measure of success.

Read Gross’s whole piece here.