The Obama Administration issued a report Monday – the fifth anniversary of the American Recovery and Reinvestment Act – taking credit for a “significant part” of the bounce-back from one of the worst economic crises since the Great Depression.
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The paper drafted by the Executive Office of the President said The Recovery Act pushed by President Barack Obama created on average 1.6 million jobs per year through 2012. It also estimates the legislation raised gross domestic product, a broad-level gauge of economic activity, by between two and three percent from late 2009 through mid-2011.
“Thanks in significant part to the actions of President Obama, the economic picture today is much brighter,” the report that was submitted to Congress said. “GDP per capita started expanding in the third quarter of 2009 and reached its pre-crisis level in nearly four years, considerably faster than the historical record suggests is the typical pace of recovery following a systemic financial crisis.”
Following passage of the Recovery Act, Obama signed into law more than a dozen fiscal measures cited in the report, all aimed at improving growth, generating jobs and assisting those hurt by the downturn. The measures, according to the report, included: extending unemployment benefits; measures for teacher jobs; aid to states for Medicaid; a temporary 2 percent payroll tax cut for 160 million Americans; expanding tax benefits for businesses to help them write off the cost of investments; the cash-for-clunkers program designed to boost auto sales; expanding homebuyers’ tax credits; additional business tax incentives and small business tax cuts; the HIRE Act tax credit, and incentives to hire veterans.
As a result of these measures, the economic recovery in historical terms has been “considerably faster” than those following a “systemic financial crisis,” the report concludes.
Since 2010, the U.S. economy has added over 2 million private-sector jobs a year, reducing the overall unemployment rate down to its current level of 6.6%, its lowest since October 2008.
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The EOP report says the job gains occurred despite “significant headwinds,” pointing to reductions of jobs at all levels of government, federal, state and municipal.
“While there is more work to do to help provide opportunity for all, the Recovery Act and subsequent jobs measures were an important step in the right direction,” the report states.
Not everyone in Washington, D.C., agrees with the White House’s assessment of the stimulus measures. Speaker of the House John Boehner (R-Ohio) issued a statement Monday critical of Obama’s economic policies.
“The ‘stimulus’ has turned out to be a classic case of big promises and big spending with little results. Five years and hundreds of billions of dollars later, millions of families are still asking ‘where are the jobs?’ More Americans are living at or below the poverty line. Median household incomes are down. Prices on everything from gas to groceries are higher. A new normal of slow growth has set in, with most now saying the worst is yet to come. And to think that the White House said the ‘stimulus’ would make things better ‘almost immediately,’” Boehner said in a statement.
Initially priced at $787 billion and later revised to $831 billion, the act included $212 billion in tax cuts (mainly through the payroll tax cut), $296 billion in mandatory spending on programs including Medicaid and unemployment benefits, and $279 billion in discretionary spending targeting areas such as aid to individuals to investments in infrastructure, energy, education, and health care.
The report says the array of measures is expected to pump $763 billion into the economy by 2019, with most of it being released before the end of fiscal year 2012.
The EOP credits the Recovery Act with preventing a large increase in poverty, saying without the government stimulus the poverty rate would have risen 4.5 percentage points from 2007 to 2010. But due to stimulus programs initiated through the act the poverty rate rose just 0.5 percentage points.
“Without the Recovery Act’s boost to household incomes, the poverty rate would have risen an additional 1.7 percentage points—which translates into about 5.3 million additional people that would have slipped into poverty in 2010,” the report states.
Moreover, by the EOP’s calculations the stimulus act will increase long-term U.S. growth while having a negligent impact on long-term U.S. debt. The stimulus programs, the report notes, included “substantial investment” in physical and technological infrastructure, education and job training, scientific research, and clean energy.
For instance, funding for more than 15,000 transportation projects will improve nearly 42,000 miles of road, repair over 2,700 bridges, and provide funds for over 12,220 transit vehicles. In addition, the measures funded unprecedented investments in American high-speed rail that has impacted 6,000 miles of high-performance passenger rail corridors and helped purchase 120 next-generation rail cars or locomotives.
The act also funded the clean up of 1,566 acres of properties now ready to be reused, and led to 30,900 old diesel engines being retrofitted, replaced, or retired, which has reduced lifetime emissions of carbon dioxide by 840,300 tons and particulate matter by 3,900 tons, according to the report.
Finally, the EOP believes that because the Recovery Act was temporary, its impact on the long-run fiscal situation was “minimal,” adding less than 0.1% of GDP to the 75-year fiscal gap.