Some federal legislation is confusing and hard to evaluate. Sometimes it’s due to complexity – other times it’s because opponents create complexity to mislead the public. Congressman Peter Roskam recently decided to confuse what the recently passed stimulus package does – and then criticize it for what it doesn’t do.
The federal stimulus package (“American Recovery and Reinvestment Act”) will spend a lot of money (hundreds of billions) in a relatively short period (most of the money should be spent within 18 months) to “jump start” the economy through quick job creation (most of the effects will be within a few years). Republican Congresswoman Judy Biggert understood this when she criticized the plan for not creating jobs quickly enough. I have my arguments with Congresswoman Biggert (e.g. without large GOP tax cuts the stimulus would spend more money creating more jobs), but at least we’re arguing about the same stimulus legislation. Here’s what Republican Congressman Peter Roskam says about the stimulus legislation,
“By spending over $1 trillion, the non-partisan Congressional Budget Office estimated that this legislation will have zero impact on our gross domestic product by 2013, and a negative impact on GDP by 2019 — greatly weakening our economy over time.”
The first thing to notice is that Congressman Roskam seems unable to count. The legislation spends $789 billion – not “over $1 trillion.” The stimulus is designed to “jump start” our economy in the next few years. Roskam’s criticism about it having “zero impact” five years after it’s enacted is the wrong measure. Let’s go to the reason for the stimulus, the need to act immediately because almost five million Americans are now collecting unemployment (the highest number ever recorded), with an average of 600,000 jobs lost each of the last three months – and many other workers, not included in those figures, are longer-term unemployed or under-employed in jobs that won’t support them and their families. Five year projections seem cold comfort for unemployed people who need to feed and house their families today – that’s why the stimulus is designed to work immediately.
But what about Roskam’s numbers? Certainly a “negative impact” in the future, while it might be worth sustaining to prevent a much worse present, doesn’t sound very good – especially if it “greatly” weakened the U.S. economy. Thankfully for America, Congressman Roskam is lying about what the Congressional Budget Office (CBO) states, at least in its letter to Senator Gregg analyzing the stimulus (see for example this blog entry and the first few comments refuting it (and note Stuart Levine’s link to the primary source is this and for year-by-year see this)). What are the facts? In a nutshell the stimulus is projected by the CBO to provide increased employment short-term (mostly through 2011 – but with lingering positive effects through 2013). The CBO says it also should increase Gross Domestic Product (GDP) mostly through 2011 – but with lingering positive effects possible as late as 2014, and then either no effect or a slight negative effect 2014-2019.
What’s the worst case scenario in the CBO estimated stimulus impact? Unemployment decreases as much as 0.6% a year from 2009-2012 and then is unchanged by the legislation through 2019 (that means because of the stimulus more people will have work sooner!). The GDP grows as much as 1.4% a year from 2009-2012 and then we lose no more than 0.2% a year from 2014-2019 (that means the stimulus helps our country create more wealth short-term with little or no long-term losses!). In other words, even the worst case scenario by the non-partisan CBO says that the stimulus plan pretty much does what it’s supposed to do (create jobs and wealth quickly because our economy is going down the tubes fast).
Peter Roskam is free to argue against the stimulus legislation – but just because he doesn’t like it, that doesn’t mean he should lie about it.