Recovery Act a small but positive start

The economy is stalled. The vast majority of Americans are calling on Washington and especially President Obama to do something to create jobs.

But what works and what doesn’t? How did we get where we are, and what should we do moving forward?

I have opinions and so do you. But let’s honor Sen. Patrick Moynihan’s famous line: “You are entitled to your own opinion, but not your own facts.” Let’s see if we can distinguish between the two for just a minute.

First, the facts.

This is where we were in the first quarter of 2009, when President Obama took office:

• The economy was hemorrhaging jobs; 820,000 were lost in January, 726,000 in February and 796,000 in March.
• The gross domestic product had bottomed out in the last quarter of 2008 with a loss of 6.2 percent but was hardly doing better in the first quarter of 2009, falling 5.7 percent.
• The stock market was crashing. The Dow Jones average hit a bottom of 6,440 on March 9.
• The American Recovery and Reinvestment Act, popularly known as the “stimulus bill,” passed Congress and was signed into law on Feb. 9. Its total cost was $787 billion, consisting of approximately 1/3 in tax cuts and 2/3 in expenditures to be made over the next two years. It was designed to get the economy moving and thereby create jobs.

Here are facts about what happened to the economy during the next two years, through the first months of 2011:

• 235,000 jobs were created in February, 194,000 in March and 217,000 in April.
• The GDP grew during the second half of 2009 and in 2010. It was up 3.1 percent in the fourth quarter of 2010 and slowed to a still-positive 0.4 percent in the first quarter of 2011.
• In two years the Dow Jones Industrial Average nearly doubled to close at 12105 on Feb. 23, 1911.

With unemployment at 9.1 percent and an additional 7 percent having part time jobs or given up even looking for a job, virtually everyone agrees we are nowhere near where we want to be. But it was either a very great coincidence or the Recovery Act, while not curing the problem, had a positive effect on the economy. Your opinion may be that it was too expensive or should not have passed, but only if you disregard the facts can you say it was a failure.

We’ll never know, of course, what would have happened had there been no Recovery Act. Some people say (opinion) that the private sector would have jump-started the economy without the government’s help. I find that hard to believe (yes, my opinion), but that opinion is based on at least one observable fact.

The fact is that, even in an economy that has greatly improved since early 2009, banks are still reluctant to loan and corporations are reluctant to invest trillions of dollars of cash at their disposal. Why would they have done so two years ago?

Is it a coincidence that the visible signs of a slowing economy are happening just when Recovery Act money is running out? Perhaps. I really don’t know, and I don’t think anyone else does either.

Is it a coincidence that the visible signs of a slowing economy are happening just when we have finished having months of a massive fight over the debt limit increase (good or bad — you are entitled to your opinion)?

Enough. Unfortunately, facts go just so far in today’s world. So I will end with opinion.

The Recovery Act didn’t do everything we hoped it would, but it did create jobs while banks and corporations sat on the sidelines.

We should do everything possible to get them back in the business of creating jobs. Regardless of what they do or when they do it, this country must immediately focus laser-like on creating jobs.

The real cause for the recent deficits is the faltering economy. If it takes more money from the federal government to get jobs and the economy growing, so be it.

Originally published 28 Aug 2011 on delawareonline.com