US stimulus has been a success

Guido Fawkes wrote yesterday that the US stimulus had failed. In fact, it's created thousands of private-sector jobs and prevented a depression.

Guido Fawkes has long been known for his libertarian economic positions to the right even of George Osborne. Using oxymoronic phrases like “expansionary fiscal contraction” on the Daily Politics, organising the ‘Rally Against Debt‘ with Ukip against the level of government debt attended by barely 200 people, and now taking economic lessons from no greater an authority than George Bush’s sidekick, Karl Rove.

Yesterday, Guido reproduced a graph from Karl Rove’s shady Crossroads GPS organisation seeking to show that the $787 billion US stimulus package had “failed“. The inconvenient truth for Guido is that the stimulus has worked.

The Pulitzer Prize winning New York Times economics columnist, David Leonhardt, looked in detail last year at the criticisms of the American Recovery and Reinvestment Act:

Perhaps the best-known economic research firms are IHS Global Insight, Macroeconomic Advisers and Moody’s Economy.com. 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…

Mr Leonhardt goes on to examine the positive impact of the stimulus on keeping “teachers, police officers, health care workers and firefighters employed” as well as leading to a surge in corporate spending. “Pick just about any area of the economy and you come across the stimulus bill’s footprints,” he writes.

Meanwhile, the independent WealthVest Marketing website, carried a story earlier this year detailing that, “Barack Obama created more jobs in one year than George Bush created in eight years“. Since that piece was published in January, a further 908,000 private-sector jobs have been created although after three buoyant months the last set of data earlier this month was more disappointing. Responding to this, economists including Pimco’s founder Bill Gross, are calling for anything but austerity.

The only thing that Rove’s graph does show is that the stimulus has not quite lived up to the initial estimate – published in January 2009 by Obama advisors, Christine Romer and Jared Bernstein – of how many jobs it would “create or save”. This was criticised at the time, by David Leonhardt among others, for being overly ambitious and was arguably a hostage to fortune giving propagandists like Rove and Fawkes ammunition to play with. But it does not detract from the overall impact of the US stimulus.

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