The president’s Council of Economic Advisers recent report, The Economic Impact of the American Recovery and Reinvestment Act of 2009: Fourth Quarterly Report, July 14, 2010, is encouraging. By any measure, the $787 billion American Recovery and Reinvestment Act (ARRA) has been successful. Even though it was too small and included too many tax cuts as opposed to direct spending (See progressive economists Paul Krugman, and Joseph Stiglitz for more on these arguments) the Recovery Act has had an extremely positive impact on the welfare of the country. Its success underscores how impressive and effective it can be when taxpayer money is used for the common good, to help improve the lives of the majority of American citizens.
Hopefully, the solid successes of ARRA will encourage additional stimulus spending. As for the deficit, ending the misguided wars in Iraq and Afghanistan, and letting the tax cuts on the upper 5% expire, would free up a lot of money to help the American economy get on its feet. To track ARRA spending in your state or city, go to www.recovery.gov.
Here are some highlights from the report, which you can view in its entirety here:
- The magnitude of the fiscal stimulus increased from $80 billion in 2009:Q4, to $108 billion in 2010:Q1, to $116 billion in 2010:Q2.
- Government investment outlays in areas such as infrastructure, clean energy, and communications technology increased by roughly 50 percent between the first and second quarters of 2010.
- Real GDP began to grow steadily starting in the third quarter of 2009, and private payroll employment has increased by nearly 600,000 since its low point in December 2009.
- GDP, as of the second quarter of 2010, relative to what it otherwise would have been, rose by between 2.7 and 3.2 percent.
- Employment, relative to what it otherwise would have been, went up by between 2.5 and 3.6 million.
- Two thirds of the $319 billion of public investment spending on projects, ranging from roads and bridges to community health centers, to a smarter electrical grid, has been obligated and more than one-quarter has been spent.
- ARRA has already saved or created more than 800,000 jobs as of the second quarter of 2010, an increase of 30 percent over the first quarter.
- 14,000 projects have been awarded in areas ranging from highway improvements to new airport runways and public transit. Recovery Act transportation expenditures by state are positively correlated with private employment growth in heavy construction.
- Roughly $100 billion of ARRA funds have leverage provisions, which will ultimately support more than $380 billion of total investment spending. Every $1 of Recovery Act funds invested in these programs is partnered with about $3 of outside investment spending, the majority coming from the private sector.