Blue Water Ripple wallpaper, CNN Botches Report on Economic Stimulus

Blue Water Ripple wallpaper

CNN seems to be helping Fox do the heavy lifting in a bash of the Recovery Act and the Obama administration –  Economists: The stimulus didn’t help

The recovery is picking up steam as employers boost payrolls, but economists think the government’s stimulus package and jobs bill had little to do with the rebound, according to a survey released Monday.

[  ]…NABE conducted the study by polling 68 of its members who work in economic roles at private-sector firms.

What is the NABE and does a survey of economists employed at certain businesses honestly reflect the benefits of the Recovery Act. On their About page NABE lists conservative guru and Ayn Rand acolyte Alan Greenspan as a past president. That is not smoking gun proof that the NABE has an axe to grind, but they do seem to approach economics from a certain perspective. One that had a lot to do with the general economic policies that lost the nation $3 trillion dollars in wealth starting in 2007. The economists in the NABE survey did think the economy was improving, but one prominent factor effecting business in their opinion was the credit crunch – lenders still have a tight-fisted point of view when it comes to lending. That is something the administration has complained about, but despite President Obama’s powers as a tyrannical Marxist-Nazi he cannot seem to get banks to loosen their gripe on lending. The White House does have a horse in this race so sure they might have a bias, but logic is still logic and national numbers are still numbers – The Direct and Indirect Benefits of the Recovery Act

According to NABE:

The vast majority (73%) of respondents “reported the fiscal stimulus in February 2009 has had no impact on employment to date.”

Now we know that that the Recovery Act hasn’t just had an impact on employment so far – it’s had a BIG impact on employment.  From private forecasters like Moody’s and IHS Global to public economists like the non-partisan Congressional Budget Office, economists across the board have gone on-the-record saying that the Recovery Act is already responsible for millions of jobs nationwide and contributing to the economic growth that is fueling our recovery. Here are just a few of them:

IHS Global Insight chief economist Nariman Behravesh: Without the stimulus, said Nariman Behravesh, chief economist at IHS Global Insight in Lexington, 3 million more Americans would be out of work and the national unemployment rate, just below 10 percent, would be 12 percent – or higher. “There is no doubt that it had an impact,’’ Behravesh said. “When there is a shortfall in private sector demand, there is a role for government to step in and fill the gap.’’ [The Boston Globe, 3/7/2010]
Stuart Hoffman, chief economist at PNC Bank: “The stimulus worked,” said Stuart Hoffman, chief economist at PNC Bank. Without it, “the unemployment rate would probably be closer to 11 percent and the economy might not have grown at all last year.” [ABC News, 2/18/10]
Economist Stephen Herzenberg: “Cut through all the numbers, though, and this is what you find: The American Recovery and Reinvestment Act saved us from plunging into a second Great Depression… The Recovery Act brought the economy back from the brink.  And these figures probably underestimate its impact, because they don’t take market psychology into account. When the legislation passed, the economy was plunging at a pace similar to that of the 1930s. If Congress had sat on its hands, unemployment now could easily be 12 percent to 15 percent – and on its way to 20 percent.”  [Philadelphia Inquirer, 1/17/10]
Mark Zandi of Moody’s “The catalyst for the transition from recession to recovery was the unprecedented monetary and fiscal stimulus provided by government policymakers…The Recovery Act’s expanded unemployment insurance benefits, financial aid to state governments, tax cuts for households and businesses, and tax credits for home purchases all contributed to the turn in the economy. The recovery has gained traction in recent months as the sources of GDP growth have broadened to include consumer spending, business investment and exports. The job market has also stabilized. After declining by some 8.4 million jobs between December 2007 and February 2010, payroll employment expanded by 162,000 in March.” [Testimony before Senate Finance Committee, 4/14/2010]

We do not know where these NABE economist work in the private sector and obviously job creation is not where we would like it to be, but a headline that reads “The stimulus didn’t help” is both deceptive and might remind many readers of the kind of distorted messaging that has made Fox so popular among tea conservatives who seemed to have slept through the Bush-Republican Congress years.

And keep in mind that the Recovery Act hasn’t just created jobs directly by paying salaries for workers.  Recent analysis from the Council of Economic Advisors found that about half of the jobs created by the Recovery Act so far were as a result of tax relief and income supports like unemployment benefits – money that doesn’t go to companies, but to consumers.

Which is why NABE economists and others are saying that it looks as though the economy is on the way to a recovery – though it may take a few years to see unemployment go down to pre-Great Recession levels. Though we’re seeing progress in both hiring and lower job loss rates – Economists say recovery looks stronger than expected

Why the brighter outlook? Consumers are opening their wallets more widely than expected. Retail sales climbed at a 10.1% annualized rate the past three months, highest in four years. Economists cite rising incomes, a stock market rally that makes shoppers feel wealthier and abating fears of layoffs.

Also, manufacturers are feverishly replenishing stocks to meet growing demand. And exports are swelling company earnings.

Wyss, though, cites “big headwinds.” Consumers, he says, are too burdened by high debt to continue their spending sprees. The expiration of a home buyers’ tax credit Friday will dampen housing sales. And the government’s $787 billion economic stimulus package will be gone by late 2010.

Dean Maki, chief U.S. economist of Barclays Capital, is more bullish. He says the stock rally and growing incomes will let consumers pay off debts while increasing spending. And homes are cheap enough to goose sales even after the tax credit expires, he says. He predicts 3.8% growth this year.

One more thing that is strange either about how CNN is twisting the story or NABE’s reporting of its survey is what NABE has said previously –

“Eighty-three percent believe that GDP is currently higher than it would have been without the 2009 stimulus package (ARRA).”
And more than half of the respondents to that survey “view[ed] the 2009 stimulus package as a positive factor for the economy over the longer term.”

That was just this past March 2010. Of course Democrats are going to disagree with the far Right about jobs and the stimulus, but even many Democrats had some good faith disagreements over the Recovery Act in 2009 and how it should be spent. That said even in February of this year it was obvious that the Recovery Act was stopping an economic free-fall and creating jobs – Judging Stimulus by Job Data Reveals Success

Imagine if, one year ago, Congress had passed a stimulus bill that really worked.

Let’s say this bill had started spending money within a matter of weeks and had rapidly helped the economy. Let’s also imagine it was large enough to have had a huge impact on jobs — employing something like two million people who would otherwise be unemployed right now.

If that had happened, what would the economy look like today?

Well, it would look almost exactly as it does now. Because those nice descriptions of the stimulus that I just gave aren’t hypothetical. They are descriptions of the actual bill.

Just look at the outside evaluations of the stimulus. Perhaps the best-known economic research firms are IHS Global Insight, Macroeconomic Advisers and Moody’s They all estimate that the bill has added 1.6 million to 1.8 million jobs so far and that its ultimate impact will be roughly 2.5 million jobs. The Congressional Budget Office, an independent agency, considers these estimates to be conservative.

Leonhardt isn’t a hack he does include criticisms of the stimulus – some which have some validity. On the other hand we have the newly elected himbo Scott Brown(R-Mass) claiming the stimulus did not create one job. Those kinds of mindless hyperbolic statements may have gotten him elected and are coma inducing mind candy for the tea conservatives, but also a pants on fire lie. Let’s pretend for a moment we don’t live in the age of constant political hysteria whipped up by the Right and we have fact based national debates. The stimulus was not all that many of us had hoped, but it has hardly been a failure. Unfortunately what would be need to convince the voices of hysteria is a time machine where we could travel back and let them see the country without the Recovery Act – a collapsed economy – with tea nuts begging on street corners. Even then Glenn Beck and Sarah Palin would probably find some way to deflect blame for the consequences of the policies they preached.