Friday, 27 November 2009

Experts Agree: "Without the Stimulus It Would Have Been Worse"

One of the really hard things about governing during a time of economic downturn is that people are understandably uninterested in being told taht things are bad, but they could have been so much worse.

Heck, it's an argument I hate making. People that I love are hurting, badly, in this economy - people that I love are worse off financially than they have ever been in their lives. So it's not very comforting to know that, while bad, things were very nearly much, much worse.

Uncomforting though this truth may be, however... it is true.

Mark Zandi, chief economist of Moody's and an occasional adviser to lawmakers from both parties, said, "[T]he stimulus is doing what it was supposed to do -- it is contributing to ending the recession." Zandi added that without the recovery bill, the "G.D.P. would still be negative and unemployment would be firmly over 11 percent. And there are a little over 1.1 million more jobs out there as of October than would have been out there without the stimulus."
For example, remember that a great deal of the stimulus money went directly to states to fund programs that they would have otherwise had to cut because of the downturn in their tax revenues.

"Programs" sound clinical, though - the types of things states were need to cut back on were teachers, firefighters and police. Let's say your small town loses one firefighter, one teacher, and one police officer. OK, now you've got three peopele out of work - that's three people who won't be buying much stuff in your town now. Direct effect = bad.

But the loss of that teacher means slightly larger class sizes for all the other kids. There's a proven correlation between class sizes and student performance - that means an entire school's worth of kids are slightly worse off in ways that will harm their future.

One fewer police officer on the street means the PD needs to reorganise their shifts - slightly more of each officer's time is now focussed on emergency callouts, for instance, and slightly less on patroling. Areas that aren't patrolled can become more welcoming for a small number of criminal elements.

Let's not even talk about what happens if the fire department is down one many (possible consequences = detroyed property and lost lives).

Long term indirect effects = even worse.

A LOT of money was spent by the government trying to forestall the worst effects of the recession. But in the long run, in my view, this was all DEFICIT busting expenditure. It costs a lot more to fix a community once it's broken than it does to keep it from breaking in the first place. The President wasn't free to spend as much money as he would have liked in the stimulus package. But there simply is NOT ARGUMENT whatsoever based on fact that says the stimulus didn't save jobs - it paid salaries of people who would otherwise have been fired.

Unfortunately, an awful lot of people who deserve a hell of a lot better got badly burned anyway. It's heartbreaking.

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