July 14, 2010

American Recovery and Reinvestment Act of 2009: An Update

Testimony before the House Budget Committee
Key materials
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Since the president signed the stimulus package into law, the U.S. economy has shed another 2.5 million jobs and the unemployment rate has climbed to 9.5 percent from 7 percent, higher than the White House predicted it would have reached even without the stimulus.

While the stimulus may have appeared to have been a wise investment when it was made, it was really no wiser than a junk-rated mortgage-backed security: though the stimulus claimed a good rate of return, in reality it appears to have lost money by destroying growth. At best, it shifted jobs from privately funded to publicly funded ones.

The first step in real job creation is government to acknowledge its limitations. Private businesses are the true drivers of job creation; they flourish when they have a reasonable expectation that the government will be noninvasive, non-burdensome, and fiscally responsible. By creating such an environment, the federal government would do more to aid job creation than any stimulus package could.