President Obama’s February 2009 stimulus bill, the American Recovery and Reinvestment Act, was a political disaster. It helped fuel the Republican revival of 2010 and now stars in Mitt Romney’s ads. The president even stopped uttering the word “stimulus.” But the $787 billion bill was one of the most important and least understood pieces of legislation in modern history. It was the purest distillation of what Obama meant by change, transforming our approaches to energy, education, health care, transportation and the economy, promoting long-term reinvestment as well as short-term recovery. Just about everything Americans think they know about it is wrong. Here are a few examples.
1. The stimulus didn’t create jobs.
A year after Obama signed the bill, the percentage of the public that believed it had created jobs was lower than the percentage that believed Elvis was alive. But at its peak, the Recovery Act directly employed more than 700,000 Americans on construction projects, research grants and other contracts. That number doesn’t include the jobs saved or created through its unemployment benefits, food stamps and other aid to struggling families likely to spend it; its fiscal relief for cash-strapped state governments; or its tax cuts for more than 95 percent of workers. Top economic forecasters estimate that the stimulus produced about 2.5 million jobs and added between 2.1 percent and 3.8 percent to our gross domestic product.