Ever since the unemployment rate reached 9.5%, the airwaves are awash with gleeful free-market pundits and conservative politicians.
They point an accusing finger and proclaim the $750 billion economic stimulus spending plan President Obama and the Democratic Congress approved last winter is a total failure.
But can we really say that — or more importantly, know that — after only a few months?
Let’s put aside the considerable hypocrisy in these attacks.
If the Obama haters had their way, the government would have stood aside and let market forces try to pull the economy out of the worst financial crisis since the ’30s. Unemployment would have been no better — and probably worse — than it is today.
It’s simply too early for any rational, fact-based analysis.
There are some good reasons to wonder how effective the stimulus will be. Liberal economists, for example, have repeatedly said it isn’t big enough for the size of the crisis.
Thomas Mann, a senior fellow at the Brookings Institution in Washington, summed up this “ridiculous” rush to judgment better than I possibly can.
Here’s what he wrote recently on Politico:
Let’s get a grip on reality. We are mired in the deepest global economic downturn since the Great Depression. Extraordinary steps taken by the United States (starting at the end of the Bush administration with TARP and extended under Obama) and other countries appear to have averted a complete financial meltdown. Fiscal stimulus plans put in place by governments around the world also seem to have warded off a downward cycle of deflation and depression. Having avoided these twin disasters, the U.S. and global economy nonetheless are a long way from unwinding the housing bubble, highly leveraged financial positions, and huge global imbalances. As a trailing indicator, unemployment will almost certainly increase over the next year and be slow to return to pre-recession levels.
Drawing conclusions about the efficacy of the Obama stimulus four months after its passage is ridiculous. Arguably it should have been larger and involved even more transfers to fiscally-strained states but a small group of Senate centrists, whose votes were needed to shut down a filibuster, made that impossible. Under pressure from Republicans and moderate Democrats, the stimulus also relied more heavily on tax cuts than was justified, given the tendency of households to save such rebates in times of economic peril. But the dollars are beginning to flow more rapidly in ways that will almost certainly hold unemployment below where it would otherwise have been. What the administration forecast in January is beside the point. Does any serious analyst believe that we would be better off without the stimulus or by converting all spending plans into additional tax cuts?