CBO: Bad Economy Would Be Worse Without Stimulus
Updated: 3 hours 11 minutes ago
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Joseph Schuman

Joseph Schuman Senior Correspondent
AOL News
(Aug. 25) -- A complete cure for the economic malaise gripping the country is still eluding officials in the Obama administration and the Federal Reserve, but that doesn't mean the policies they've taken haven't helped.

Today's report from the nonpartisan Congressional Budget Office finds that the stimulus program pushed through last year by President Barack Obama has put millions back to work -- a point fiercely contested by Republicans in the pre-election debate over stubborn unemployment and slowing growth.

In this Aug. 2, 2010 photograph, Joseph Oeler Jr., 35, of Hollywood, Fla. waits in line at a job fair
Lynne Sladky, AP
Joseph Oeler Jr., 35, of Hollywood, Fla., waits in line Aug. 2 at a job fair in Dania Beach, Fla. Oeler was the first in line and has been looking for work for three months. Despite scenes like this, a new report says last year's stimulus program has put millions of people back to work.
During the second quarter of this year alone, the CBO said, the package created new employment for between 1.4 million to 3.3. million people who didn't have jobs, and allowed even more -- as many as 4.8 million -- to move from part-time to full-time work.

The stimulus package -- which helps states pay for Medicaid, education and transportation costs, extends unemployment benefits and food stamp assistance, funds infrastructure projects and gives tax relief to individuals and businesses -- also lowered the unemployment rate by between 0.7 and 1.8 percentage points from April through June, according to the CBO report.

These are significant contributions at a time when the official unemployment rate, 9.5 percent, is certainly bad enough.

Yet as businesses remain too cautious to hire and Americans' job insecurity holds back consumer spending and home buying, the poor jobs market shows that the administration and Fed haven't been able to generate a sustained economic recovery.

Barring a major terrorist attack, no issue will influence the November midterm elections as much as the economy, which was the focal point of House Minority Leader John Boehner's assault Tuesday on Obama's record.

"All this 'stimulus' spending has gotten us nowhere," Boehner said in a speech in Cleveland that slammed the February 2009 stimulus package -- known as the Recovery Act -- at least nine times.

Boehner called for the resignation of Obama's top economic advisers responsible for the policy and said a Republican-controlled Congress would cancel "unspent 'stimulus' and TARP bailout funds that put the brakes on Washington's out-of- control spending spree."

The White House quickly rebutted, noting that Boehner last year praised the stimulus spending that paid for projects in his Ohio district.

And today Vice President Joe Biden cited the stimulus benefits reported by the CBO as something "impossible for even the most cynical, bent-on-rooting-for-failure critics to deny."

But the CBO report hardly charts a clear path forward for further improving a moribund economy.

The stimulus may have contributed up to 4.5 percent toward the economy's second-quarter growth, according to the CBO, but that growth overall was a relatively anemic 2.4 percent, and the post-recession recovery seems shakier with each new week of economic news.

The Commerce Department today said sales of single-family homes in July were down 12.4 percent from June and an alarming 32.4 percent from July of last year. This followed a similarly grim report Tuesday on sales of previously owned homes.

The bad news on the housing market can be partly blamed on the expiration in June of a tax credit aimed at helping people buy a home. But the downturn comes amid historically low mortgage rates, and average home prices have been falling for 30 straight months -- which should be plenty of inducement for prospective homebuyers.

The economy is growing, just not very quickly, and not enough to make much of a dent in unemployment or persuade many more Americans that it's safe to take a bet on a new home.

And the problem for Obama and fellow Democrats is that there is little they can do to add a new noticeable economic stimulus before voters go to the polls in November.
Filed under: Nation, Politics, Money, Top Stories

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It is good to know that the stimulus did what it was supposed to do.

And it is frustrating that the recovery isn't happening as fast as we would like but we could be in the big D word by now if the stimulus hadn't been done.

i don't think it's growing, but it doesn't seem to be getting worse...

This information is if from a nonpartisan organization.

The stimulous was a huge failure, and has done more harm to the economy than good.

I am no fan of Obama but I really wish he could do something to get this economy going again.It's depressing when every other store I see is closed or getting ready to close.I feel like my job could end at any minute.One of my sisters is unemployed,broke and can't get a job to save her life.I hate to see America like this and wish it would change.

I would like to believe what Obama has done has helped but to be honest I have never seen the job section so small in the paper.All the jobs take up 1/4 of one page in the paper.The malls are empty.If a business is not closed it is hardly getting by.Many businesses I thought would be around forever are closing up.It seems to me if a business hasn't closed the only thing keeping it going is the lease agreement.Once that is over the business is over.


I really don't care if Obamas approval rating goes to 100%.Do something to help this country get back on it's feet again.

this is one of those issues,, so much information is out there and people will choose which is accurate and which is spin,,, I believe this is accurate but Im sure many will weigh in on how they think it is just spin(I have only read your post at this point,, about to read the rest now,,lol)

The revision on cost has gone from $787 billion to $814 billion.

Let's do some math..

the numbers taken from the CBO report..

Jobs created.. 1.4 million to 3.3 million

814,000,000,000/1,400,000= $581,428 of debt per job created

814,000,000,000/3,300,000= $246,667 of debt per job created

Lets look at this from another perspective..

The average income for an american worker is $40,000 per year.

So even if you take the high end of the CBO estimate, you are looking at a net loss of $206,667 per job created..

I know you are sitting there and saying what about the jobs that were saved..

Let's look at my state. Maryland..

These numbers come from Recovery.gov

Maryland has received $1,282,460,000 in stimulus money

Maryland has reported that as of right now there are 8,732 jobs that are being funded by stimulus money.

Some more math..

1,282,460,000/8732= $146,869 per job..

So roughly a net loss of $106,869 per job..

I guess that is better than the national averages, but we still have $3 billion more coming..

Everyone wants the economy to strengthen. Everyone wants people to be able to find work.

The differences are in how we go about doing it.

I'm sorry, but this just isn't the way.

The country is still losing 100,000+ jobs per month.