So who was right?
The congressional Republicans, who have gone around the country claiming that the stimulus bill has created no new jobs and stimulated no new economic growth, or the congressional Republicans, who have gone around their home states and districts bragging that stimulus projects would create a lot of new jobs?
Well, The Congressional Budget Office has looked into the question, and it turns out that the Republicans were right! The stimulus bill has indeed produced a lot of new jobs and increased economic activity.
According to the report:
In sum, CBO estimates that in the fourth quarter of calendar year 2009, ARRA’s policies:
– Raised real GDP by between 1.5 percent and 3.5 percent;
– Lowered the unemployment rate by between 0.5 percentage points and 1.1 percentage points;
– Increased the number of people employed by between 1.0 million and 2.1 million;
– Increased the number of full-time-equivalent jobs by 1.4 million to 3.0 million compared with what those amounts would have been otherwise.
The CBO also estimates that the biggest impact of the stimulus is yet to come. It predicts that job growth produced by the stimulus will cut the unemployment rate by 1.9 percentage points for the rest of the year, boost GDP by as much as 4.5 percent in the second quarter of this year and increase the number of people employed by as much as 3.3 million people.
By the way, CBO also compared the stimulus effect of various aspects of the legislation. Direct spending by state and federal governments had the biggest effect, producing four to five times as much beneficial impact as tax cuts to higher income taxpayers.
Just in case you were wondering.