Putting a Better Face on Economic Stimulus
by Craig Jennings, 9/13/2010
The latest economic data on the Recovery Act from the Congressional Budget Office indicate that, by at least two important metrics -- gross domestic product (GDP) and unemployment -- it is in fact working (see here, here, here, and here for more). Yet, only 33 percent of Americans think the Recovery Act "helped the jobs situation."
The Recovery Act was billed as economic stimulus measure, but some how the number of letters in the word "stimulus" has been reduced to four.
Surely opponents of Keynesian economics have been working overtime to tar the Recovery Act and the word "stimulus" as economic and budgetary abominations, but as The New Yorker's James Surowiecki points out, there are more factors at work than just a clever PR campaign.
The hostility has numerous sources. Many voters conflate the stimulus bill with the highly unpopular bailouts of the banking sector and the auto industry; Republicans have done a good job of encouraging such misconceptions...Also, the stimulus—which, to begin with, was too small to completely offset the economy's precipitous drop in demand—was oversold. The Administration's forecasts about the recession (particularly regarding job losses) were too optimistic, and so its promises about what the stimulus would accomplish set the public up for disappointment.
Surowiecki also notes that "[p]aradoxically, the very things that made the stimulus more effective economically may have made it less popular politically." Two of those being 1) aid to states, which prevented mass layoffs and 2) tax breaks spread out over the year rather than paid in one lump sum.
"Stimulus" is a dirty word, and the Recovery Act is legis non grata, yet 57 percent of Americans think "policymakers in Washington" should spend more to create jobs and 74 percent agree that the administration should "create more jobs even if it means less deficit reduction."
Seems to me that this is the intersection of good policy and good politics: push money into the economy but call it something else, something like the Pulling Up People Performing in Economic Stress Act of 2010, or just PUPPIES. Who could hate PUPPIES?
Image by Flickr user ThrottleUK used under a Creative Commons license.