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Charts and graphs that will finally make it clear that the stimulus is working


That chart -- or, more accurately, collection of charts -- comes from Jackie Calmes and Michael Cooper, who pulled together a bunch of private forecasts to find what the analysts trusted by the all-powerful market thought the stimulus's effect had been. The answer was unambiguous: It cushioned, but did not wipe out, the effects of the recession. And that's not Democrats talking or Republicans talking. It's private analysts who, as Brad DeLong points out, are paid to deliver accurate information to their clients.

The electorate, of course, rewards actual conditions, not conditions relative to a hypothetical scenario in which ameliorative policies weren't adopted. But it's evidence that there's no actionable coherence clause in American politics that critics of the stimulus can argue against the effort on the grounds that joblessness is too high. If you think joblessness is too high and something should be done to lower it, then you think we should have more stimulus, not less.

By Ezra Klein  |  November 25, 2009; 9:30 AM ET
Categories:  Charts and Graphs , Stimulus  
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"But it's evidence that there's no actionable coherence clause in American politics that critics of the stimulus can argue against the effort on the grounds that joblessness is too high."

Hahahahaha. You watch them argue its too high! Next year's elections oughta prove for any remaining doubters that American politics is totally unmoored from reality, evidence, data or anything else empirical.

I wish the president's speechwriters well in trying to craft a compelling narrative around how horrible things could have been, and are now only less horrible.

The easier gig will be for the republicans running next year, who will unabashedly declare the stimulus an utter failure because unemployment is still high, without any of this counter-factual reasoning.

Posted by: zeppelin003 | November 25, 2009 9:50 AM | Report abuse

Ok, I'm sold: I think joblessness is way too high, think something should be done to lower it, and think we should have more stimulus.

After reading the NYT report and its bang-for-the-buck information, I see that things like food stamps and unemployment compensation do quite a bit.

Are the statements that "Fiscal stimuli based upon tax cuts are more likely to increase growth than those based upon spending increases. As for fiscal adjustments, those based upon spending cuts and no tax increases are more likely to reduce deficits and debt over GDP ratios than those based upon tax increases." true or false? That is, what should the next stimulus be?

Posted by: rmgregory | November 25, 2009 10:16 AM | Report abuse

It should also be noted that the Moody's forecast is from Mark Zandi, an economic adviser to the McCain campaign in 2008.

Posted by: gdcassidy1 | November 25, 2009 10:35 AM | Report abuse

The man on the street is still waiting for *his* bailout to arrive:


Posted by: bondwooley | November 25, 2009 10:58 AM | Report abuse

Ezra must think we've forgotten that the Administration's own ecomonomic projections earlier this year asserted that the stimulus would keep unemployment below 8%. I'm sure that when the projections noted above prove to be equally wrong, Ezra will ignore them just as thoroughly.

Posted by: tomtildrum | November 25, 2009 11:06 AM | Report abuse

I don't think there's disagreement that the stimulus was necessary but the question is the "target" of the stimulus. Small businesses who many in congress like to tout as the "job producers" in this country got the crap end of the stick as usual while the corporate giants got bailouts. All small business gets is taxes through a still to come healthcare bill and the promise of savings in 5-6 years through a health insurance exchange. That would be nice and all IF those small businesses survive until then. Sadly many will not.

Posted by: visionbrkr | November 25, 2009 11:06 AM | Report abuse

Stop it with the nonsense that Mark Z. was an adviser to McCain in 2008. He gave McCain's campaign some advice on one minor issue and now everyone trots him out as the reason we should believe the stimulus to be such a great idea. He actually voted for Obama and has voted for Dems in the past several presidential elections.

I'm not going to argue against using counterfactuals since as economists we have to use them a lot and I wish Republican politicians would quit saying "well, you can make up any numbers you want". Instead, I'll attack the results from a different angle and say that the model parameters they use to generate these counterfactual scenarios and forecast estimates are inflated, particularly for employment. GDP is an easier measure to raise, since government spending is a part of the calculation. If you look at the private demand component of GDP, conditions are still pretty bad.

Posted by: novalfter | November 25, 2009 11:10 AM | Report abuse

The only tax cut that makes sense as a stimulus is a temporary cut in the Social Security tax. Beyond that we need more spending on unemployment and food stamps, aid to the hungry etc both for humanitarian reasons and because the money (like the payroll tax cut) will be spent, and aid to the states to prevent more layoffs. And then we need redistributive taxes on the rich who have made out like bandits (an extra 3-5% on incomes over $1 mill, a correction of the estate tax back to a $2 mil exclusion, an end to the preferential tax on dividends but with a $2500-3000 exclusion) and a small transaction tax (.025 or .05% is enough) on stock, bond, commodity and derivatives transactions to help pay for it all. And the Senate's Medicare tax fpr health care reform.

Too bad we are too paralyzed and polarized to do anything significant.

And scale back the wars through unattainable benchmarks.

Posted by: Mimikatz | November 25, 2009 11:54 AM | Report abuse

The GDP plots do NOT show any evidence the stimulus package was effective and should be ignored.

Note the way GDP is calculated, an increase in government spending leads to an increase in GDP.

So when the government borrows money (from future taxpayers) and shovels it out the Treasury doors in any arbitrary fashion, the incurred debt does NOT affect GDP but the spent money DOES add to GDP, simply by definition.

The use of the GDP plots in essence assumes what the author is attempting to prove, which only proves the author is a bonehead.

Posted by: angrydoug1 | November 25, 2009 12:51 PM | Report abuse

rmgregory: Just to clarify, those statements came from Greg Mankiw's group, not the NYT article.

Posted by: bmull | November 25, 2009 8:24 PM | Report abuse

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