Stimulus more or less? A failure not being acknowledged. PART 6

Sometimes partisan defenses backfire.

Back when this multipart posting was beginning, a friend sent an article entitled “Recovery Act: How Obama's Stimulus Is Changing America” by Michael Grunwald TIME MAGAZINE

The cover email said simply: “This reads like it was written by the Administration, but it gives a good description behind the development of the stimulus package. The package has a significant 'investment in America' slant, maybe at the expense of adding jobs ASAP.”

The nice thing is that the article doesn't shy away from the fact that the Recovery Act was about advancing Obama's agenda, not stimulus. That TIME MAGAZINE considers that great isn’t surprising. Focusing just on the Recovery Act makes sense from a partisan perspective regardless of one’s partisan leanings, but it could just make stimulus a partisan issue. The article makes clear that the stimulus wasn’t about stimulus. That admission by TIME MAGAZINE is surprising. Given their partisan perspective, one would expect them to claim it is all things to all people. Perhaps their shrinking readership has been reduced to such a partisan crowd that they don’t feel that’s necessary. They gave up presenting news years ago.

My concern is that the public will judge the effectiveness of fiscal stimulus by the Recovery Act. Stimulus started with Bush's approximately 200 B tax rebates to middle and lower income tax payers. But, the total over the two administrations is going to come in being well over a trillion dollars, probably in excess of $10,000 per household. Some partisans will also stick in any deficit and come up with multiple trillions.

From my perspective, the issue is whether the multiplier stays linear as the size of the stimulus grows. From the public’s perspective, the issue seems to be how fast the multiplier kicks in. The two perspectives can lead to very different policy prescriptions. Further, the article points out just how hard it will be to evaluate fiscal stimulus when what we got was something else: an investment in America from one man’s perspective or a massive boondoggle from another’s.

In future postings the absolutely nonsensical aspects of some of the defenses this article advances will become apparent, but the postings won’t be on the stimulus. Rather, they’ll address topics like “Green” technology, venture capital and other topics where, for some reason, the author of the TIME MAGAZINE article fails to recognize what’s going on unless it has a partisan label. So, perhaps one might want to read the article simply for what it conveys: a good explanation of why the recovery is slow and anemic.