The Recovery Act, five years later

It seems like ages ago, but in late 2008 and early 2009, the global economic crisis had reached terrifying levels, and U.S. policymakers had to choose a direction for the nation’s future. Democrats rallied behind a stimulus package called the Recovery Act, while Republicans called for a five-year federal spending freeze.

 

Five years later, on the anniversary of President Obama signing the Recovery Act into law, GOP lawmakers are apparently eager to ask, “See how right we were?”

On one of the funniest quotes I’ve seen in a while came from Senate Minority Leader Mitch McConnell (R-Ky.), who argued on the stimulus’ anniversary, “The real tragedy here is that none of this was necessary. Republicans have always been willing to work with the president on reforms.”

 

Putting aside the fact that congressional Republicans haven’t been willing to work with the president on much of anything, there are a few broad problems with these complaints. First, if the nation had followed the GOP’s preferred course at the height of the crisis — David Brooks described the Republican prescription at the time as “insane” — the Great Recession would have been far worse, making their complaints now rather laughable.

 

Second, if GOP lawmakers are convinced the stimulus failed, why’d they take credit for its investments back home?

 

And third, public relations notwithstanding, the Recovery Act was a great success.

 

Michael Grunwald, whose book on the stimulus is an exceptional piece of work, reminds us today that the Recovery Act “spelled the difference between contraction and growth for much of Obama’s first term.”

 

Let’s revisit a piece from a couple of years ago and consider some charts. Here, for example, is the nation’s GDP before and after the Recovery Act. Note, once the stimulus kicked in, the economy immediately started growing.

 

And here’s private-sector job growth before and after the stimulus. Note, once Obama’s Recovery Act kicked in, job growth immediately improved.

 

 

The evident details are hard to miss — the economy crashed, then Democrats approved the stimulus, and then the economy started growing, job creation picked up, and the stock market soared. I’ve long been curious: for Republicans, how is this possible? Was it magic? Was it a coincidence? How do they explain why every relevant economic metric showed sharp improvements immediately after the Recovery Act kicked in?

 

Now, if the right wants to argue that the recovery didn’t pick up steam and become robust, that’s a perfectly fair argument. Soon after the stimulus helped the economy find its footing, the European Debt Crisis interrupted the progress in the spring of 2010. By 2011, Recovery Act spending slowed and congressional Republicans threatened to crash the economy on purpose unless their debt-ceiling demands were met, which undermined the economy further. We’ve seen 47 consecutive months of private-sector job growth, and the unemployment rate is at a five-year low, but growth hasn’t been as strong as the administration hoped. But if Americans are wondering who to hold responsible for this, Republican officials may not like where the fingers are pointed.

 

Indeed, perhaps the most striking thing about GOP economic arguments is that they weren’t just wrong about the efficacy of Clinton’s policies, and then wrong again during the Bush/Cheney era, and then wrong once again about whether the Recovery Act would help turn the economy around, congressional Republicans also seemed to go to great lengths to impose policies — debt crises, spending cuts, sequestration, a government shutdown — that seemed almost designed to make the economy worse.

 

It’s why Ben Bernanke — a Fed chairman who, up until extremely recently, was considered a fairly conservative Republican — repeatedly told Capitol Hill that the single biggest obstacle to a healthier economy has been the fiscal policies demanded by GOP lawmakers.

 

For congressional Republicans to note the fifth anniversary of the stimulus by patting themselves on the back is, to put it mildly, a deeply offensive display from policymakers who should arguably feel quite embarrassed right about now.

 

Update: Several alert readers reminded me of an important point. While the Recovery Act was bolstering the economy, the nation still had to contend with state-based austerity measures and a massive drop in public-sector employment, brought on by counter-stimulative spending cuts. It’s another detail worth keeping in mind today.