Was The Stimulus Package ‘Money Well Spent’?

January 26th, 2012

No issue will be more important in the upcoming presidential election than President Obama’s handling of the nation’s economy. Critical to that debate is an assessment of the Obama administration’s economic stimulus program. Republicans claim it was a costly failure. Supporters maintain it saved the U.S. from a depression.

ProPublica investigative reporter Michael Grabell’s new book Money Well Spent is an expansive account of the stimulus programs. Grabell scoured federal records and traveled to more than a dozen states across the country for the book, which details how the 2009 “American Recovery and Reinvestment Act” was passed and how the stimulus money was spent. Grabell assesses Republican complaints that the program funded silly projects like a tunnel for turtles in Florida. He describes families thrown into poverty by the recession and looks at whether the plan made a difference in their lives. And he tries to answer some of the big questions — how many jobs the plan saved or created, and whether it was a sound investment of tax dollars.

On Thursday’s Fresh Air, Grabell explains why the stimulus plan became what he calls “one of the most reviled pieces of legislation in recent memory.” Grabell also offers his own assessment of President Obama’s $825 billion stimulus plan, which was designed to jump-start the ailing economy. It remains the largest recovery plan in American history.

“You look at all these major programs in history — the moon race, the Manhattan Project, the WPA [Works Progress Administration] — the stimulus was bigger than all of these things,” he tells Fresh Air‘s Dave Davies. “And so it begs the question: What did we accomplish with all of this money?”

Interview Highlights

On the New Deal Programs being larger than the stimulus, relative to the size of the government at the time

“When you look at the size of the federal government back in the 1930s, it was much smaller than [it is] today. Now the government is constantly involved in health care, in supporting a defense manufacturing industry, supporting education in a way they weren’t previously. When you compare, relative to the size of the federal budget, the WPA was really many times what the federal budget was at the time. And we look at the stimulus and it was about 25 percent of the whole federal budget when you include Social Security and health care. So when people think of the New Deal, they think of, ‘Wow, we really went from 0 to 60.’ And when you think of the stimulus, a lot of people didn’t notice it. It was really like we were going from 35 mph to 50 mph.”

On why the Obama administration didn’t make the stimulus plan bigger

“They didn’t seek a bigger stimulus plan mainly because of politics. There was definitely the feeling that Congress would not stomach a package over $1 trillion. And if they went in with a number like that, they would have been seen as this new liberal administration where spending was out of control. So they were looking at a smaller package.”

On the purpose of a stimulus

“In almost every recession and economic downturn that we have had in this country, some stimulus effort in some way was tried. And the idea is the government has the ability that maybe the private sector doesn’t have: to borrow money and stimulate the economy. You spend money on food stamps and infrastructure projects, and that will pay off because people now have money in their pockets that they can spend somewhere else. So you get this multiplier effect, that one dollar creates more economic output.”