Stimulus Debate Not Over Yet

CNN has recently run an opinion stating why the stimulus worked out for us. I usually defer to Z when it comes to economics, but my common sense and basic knowledge supports what I read here. Also, the author is reasonable about giving the "other side" their fair appreciation. That usually only comes from someone who is confident and open-minded, something that is usually lacking on a topic so heavily debated.  As he points out, this will be a major subject in the upcoming election, so we may as well talk it over.

(CNN) -- As others have, and more will as the presidential election heats up, David Frum went after the Recovery Act on these pages. I'll address his critiques in a moment, but first let's just get this right out there: Though we can never know alternative histories -- in this case, how the economy would have performed absent the stimulus -- the weight of the evidence is that the Recovery Act did what we expected it to do.

It created a few million jobs and shaved a few percentage points off the unemployment rate. But most important, it kept a bad situation from getting a lot worse.

I think that is the most frequent gripe I had. Opponents screeched that because this didn't bring us back to our former glory that the program was a failure. Quite the opposite. I believe turning a death spiral into some sort of stable status is a major victory. That type of hyberbolic stupidity is so upsetting because it snubs hard work and success, and the mentally weak fall for it because the can't see through it.

This type of evidence, which is very common among researchers who have examined the Recovery Act's impact, is clearly inconsistent with Frum's view that the act was a failure.

But in this case, two pictures are worth 2,000 words. The Zandi/Blinder analysis of the stimulus and accompanying measures -- and note that Frum claims there were no accompanying measures -- is called "How the Great Recession Was Brought to an End." The graphs embedded in this article show why.

Definitely read the article and check out the data. Again, if he is wrong I can't spot where. In a simple 1+1=2 manner, you cannot claim failure in the face of improvement. At best, opponents will say there was a better way, and maybe there was. But as the author points out in his closing, what we ended up doing worked pretty darn well.

Frum and others can argue that all of the above haven't made everything all better, but no conceivable monetary or fiscal stimulus could have fully offset the impact of a recession of this magnitude, particularly one with such highly leveraged banks and households at its root.
What they can't say, at least not without ignoring the evidence, is that the Recovery Act failed. It did what we expected it to do, creating jobs, lowering unemployment and preventing recession from morphing into depression. If anything, what the evidence shows is that it ended too soon. And that is why President Obama is, as we speak, crafting a smaller package of targeted jobs measures to build on the success of the Recovery Act.

Partisans thus need to put aside their talking points, absorb this evidence and get those measures to work in the economy as soon as possible.