Though the Recovery Act appears to have had many benefits, it could have been more effective.
Most obviously, it was too small. When we were designing it, most forecasters estimated that the United States would lose around six million jobs during the recession without fiscal stimulus. Compared with this baseline, creating three million jobs would have filled roughly half of the employment hole.
As it turned out, even with the stimulus, we lost almost nine million jobs. …. With a loss that big, creating three million jobs was helpful, but not nearly enough.
A different mix of spending increases and tax cuts might also have been desirable. …. And I desperately wish we’d been able to design a public employment program that could have directly hired many unemployed workers, especially young people.
Finally, there’s little question that policy makers — myself included — should have worked harder to earn the public’s support for the act. ….
That is more than a simple public relations problem. Recovery measures work better when they raise confidence — as Franklin D. Roosevelt understood. ….
Partly because of fierce political opposition, and partly because of ineffective communication and imperfect design, the Recovery Act generated little such rebound in confidence. As a result, it didn’t have that extra, Rooseveltian kick.
Christina D. Romer, “Economic View: The Fiscal Stimulus, Flawed but Valuable“, New York Times, 21 October 2012.
Berkeley economist Christina Romer was the chairwoman of President Obama’s Council of Economic Advisers.