Happy Birthday to the “Stimulus”
The Wall Street Journal, in an editorial this morning, points out that today is the 5th anniversary of 2009’s famous “stimulus” package, otherwise known as the American Recovery and Reinvestment Act (ARRA). Remember that?
According to the latest figures from Recovery.gov, there was $816.3 billion in ARRA deficit spending that was supposed to recover the U.S. economy.
Five years later the economy is still struggling. The money is gone.
It was originally supposed to keep unemployment from going above eight percent. It didn’t work.
After passage ARRA was followed by four long years of unemployment above eight percent. It would still be above eight percent today if not that millions of Americans have dropped out of the workforce. The labor participation rate is back to 1970s levels.
The WSJ editorial points out that “stimulus” spending was wasted on things like a $783,000 study to find out why young people consume malt liquor and marijuana, and another $219,000 study on why college students “hookup”.
However, the editorial does not single out ARRA’s most fundamental flaw. It was never designed to create jobs to recover the economy. It was designed to pay federal and state government bills until a recovery occurred. So far, that hasn’t really happened yet.
According to the latest CBO numbers, ARRA created or saved 6.75 million 1-year duration jobs. The total number of jobs comes from splitting the difference between the CBO’s low and high estimates for ARRA job creation.
For $816.3 billion spent, that figures out to $120,933 per job. ARRA doesn’t report actual worker salaries.
ARRA’s best year was 2010 when it created between 900,000 and 4.7 million jobs. That was about two percent of the total 139 million Americans employed that year.
The United States remains in a jobs depression. There are still fewer Americans employed today than before the recession started, even though there are over 12 million more working age Americans now.
Thanks for nothing, “Stimulus”. Happy Birthday.