Only one of the following statements is false. Do you know which one?
Elvis is still alive.
The Recovery Act created or saved about 2.5 million jobs.
According to journalist Michael Grunwald, more Americans believe Elvis is still alive (7%) than believe that the Recovery Act, signed into law a year ago, created any new jobs (6%).
Grunwalds new book, The New New Deal, features the results of his lengthy research and interviews of more than 200 people. In it, he contends that we have been sorely misinformed.
He does not argue that Wall Street didn’t blow up the entire financial system. He does argue that the stimulus bill is one of the most important and least understood piece of legislation in U.S. history. Some of his points:
- It prevented a sweeping number of states and local governments from making huge layoffs California would have defaulted without it.
- It created or saved 2.5 million jobs
- It increased the GDP at least 2 percentage points
- It raised seven million Americans above the poverty line
- It made 32 million poor Americans less poor
The Recovery Act took a thrashing from many of its public servants, although the vast majority of them took the money. Just a few examples some are well known, some are not:
- In the great state of Texas, Governor Rick Perry requested a share of funds to fix his mansion.
- Arizona Senator Jon Kyl went on a talk show to berate the stimulus meanwhile, the White House wrote to Arizona Governor Jan Brewer and asked which stimulus funds she didn’t want. Governor Brewer did not deny a single one.
- South Carolina Governor Mark Sanford refused to take stimulus money. His state legislators, though, wanted the funding, and chided him for not doing enough for his constituents. South Carolina had the third-highest jobless rate in the country.
A number of other key changes were accomplished by stimulus funding. Stimulus funding drove the computerization of the American medical system, which is aimed at preventing illnesses and deaths due to human error. Stimulus funds supported the most extensive infrastructure investments since the interstate project, including the first bullet train in the U.S., which transports people from San Francisco to Los Angeles. The U.S has begun a transition to a low-carbon economy, in part by launching the world’s largest wind farm, America’s first refineries for advanced biofuels and a battery-manufacturing industry for electric vehicles.
So the big question, then, is this: If it’s worked so well, why has the Recovery Act turned into an $800 billion joke? In his book, Grunwald cites four key reasons why stimulus has become a naughty word:
1) Nobody reads the footnotes. As a long-term foundation for major change, the stimulus plan was vastly undersold. The administration was vocal in their prediction that unemployment would stay below eight percent, with the caveat that there could be significant margins of error. That caveat isn’t what people remember. Unemployment rose above eight percent before stimulus money began to be distributed. Our economic circumstances were much worse than most economists predicted, and the stimulus was oversold as a short-term fix. When jobs continued to disappear, pointing to the stimulus and saying it failed was easier than pointing to the disaster that was prevented and saying it could have been worse.
2) A determination to block everything. Grunwald notes that a number of congressional players trashed the stimulus, distorted facts and made false claims that the Recovery Act was loaded with waste and fraud. One example was the infamous mob museums, which were in fact never in the stimulus. Another false cry of fraud was over the alleged $248 million for government furniture, which was actually a project to build a new Homeland Security headquarters. Financial experts predicted that, due to the amount of money involved, about 5-7 percent of the funding would be lost to fraudulent claims. Investigators so far have found only .001 percent in losses.
3) Big spending isn’t big enough. While many trashed the Recovery Act as big government spending, many debated whether it was actually too small given the disastrous economic conditions. The it’s too small argument fanned flames that the stimulus was not effective. The Recovery Act, in spite of critiques that it is too small, is actually 50% bigger than the entire New Deal.
4) The media stopped investigating. The message from Congress â€“ from both sides of the aisles was that the economy was a mess. Rather than turn over rocks to get information about what was working and what was not about the Recovery Act, the media simply accepted what they were told. They were not interested in jobs that were saved, new jobs that were created or people who had begun to pick themselves up from the brink of ruin.