Democrats have raised to a new level the triumph of campaign over governance. The White House has explicitly embraced this notion with its “Summer of Recovery” campaign to sell the public on the idea that the stimulus — which was promised to keep unemployment under 8 percent, costs $213,000 per job “saved or created” using the administration’s own numbers, and which the Europeans are now repudiating — was good policy.
This should be interesting, because the evidence doesn’t support a passing grade. The chart below shows actual GDP during 2009. It also shows what would have happened if the trajectory at the start of 2009 had continued the entire year (labeled “Continued Decline”) — that is, the graphical version of “the economy was falling off a cliff.” The shaded area is the difference – the additional GDP from not continuing to decline — and totals $268 billion.
Stimulus spending so far has been roughly $260 billion. Thus, if one attributes all improvement in GDP to the stimulus — no role for the Fed, no role for mortgage relief programs, no role for worldwide economic improvement — then it essentially broke even and provided no multiplier effects.
The stimulus was bad policy. Instead of governing more effectively, the Obama administration has started a campaign to distract from the facts.