Friday, September 04, 2009

Is the Stimulus Working?

Yes, no, maybe, depending on the beholder's politics, economic theories and selective reading of the meager statistics and evidence available.

Vice-President Biden speechified yesterday that, after 200 days, the $787 billion stimulus, although not a “single silver bullet” but “silver buckshot,” was helping the economy. “Without it we’d be in much deeper trouble,” he said, claiming that "Instead of talking about the beginning of a depression, we are talking about the end of a recession."

As unemployment reaches 9.7 percent, Republican Chairman Michael Steele was quick to counter, "The Democrats' rhetoric on their economic experiment doesn't match with the reality of millions of Americans remaining unemployed."

The Washington Post takes the middle ground with a headline, "Stimulus Credited for Lifting Economy, But Worries About Unemployment Persist" and reports that "economists generally agree that the package has played a significant part in stabilizing the economy. They are less certain about the size of the impact."

For those who prefer to make up their own minds, the White House website offers statistics, maps and graphs to show how much money has gone out the door and where, noting that the Council of Economic Advisers will be issuing its first Quarterly Report next week.

The bottom line on the stimulus is there is no bottom line in sight, but that won't keep the pontificators from exercising their opinions as fact.

In his long takeout "How Did Economists Get It So Wrong?" in this Sunday's New York Times Magazine, Paul Krugman notes about his professional colleagues:

"[Robert] Lucas says the Obama administration’s stimulus plans are 'schlock economics,' and his Chicago colleague John Cochrane says they’re based on discredited 'fairy tales.' In response, Brad DeLong of the University of California, Berkeley, writes of the 'intellectual collapse' of the Chicago School, and I myself have written that comments from Chicago economists are the product of a Dark Age of macroeconomics in which hard-won knowledge has been forgotten."

While economists carry on their academic food fight, the rest of us can just keep watching our taxpayer money flowing out and holding our breaths.

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