Here is a chart of what the Obama administration claimed would happen:
With the stimulus package
Without the stimulus package
and...
What really happened
View attachment 2933
Obama's Stimulus Package and How Well It Worked
Did Obama's Stimulus Plan Work?
President Barack Obama outlined the economic stimulus package during his
2008 campaign. Congress approved the
American Recovery and Reinvestment Act (ARRA) in February 2009. The Congressional Budget Office estimated
it would add $787 billion in
budget deficits by 2019.
The economic stimulus package ended the Great Recession by spurring consumer spending. Most importantly, it instilled the confidence needed to boost economic growth. It also aimed to restore trust in the financial services industry. It limited bonuses for senior executives in companies that received the Troubled Asset Relief Program (TARP) funds.
How Well It Succeeded
In a 2009 report, the CBO projected ARRA would stimulate gross domestic product by 1.4 percent to 3.8 percent for the fourth quarter in 2009. The stimulus was successful in 2009 GDP. The economy grew 1.5 percent in the third quarter and 4.5 percent in the fourth quarter. That's a big improvement over the first quarter's 4.4 percent drop and the second quarter's 0.6 percent decline.
In 2009, the CBO predicted that ARRA would increase employment by 7 million full-time jobs by the end of 2012. In 2015, it estimated the stimulus created between 2 million and 10.9 million jobs. Most of the increase occurred by 2011.
Most of the success was due to the Stimulus Package. By March 2009,
expansive monetary policy had done all it could. It was evident more
fiscal policy was needed. No doubt, the economic stimulus package inspired the confidence needed to turn the economy around.
Once in office, Obama realized he needed to increase the fiscal stimulus from the $190 billion plan he proposed in his campaign. Some components of his campaign plan, such as enacting a foreclosure moratorium, had already been implemented by
Fannie Mae. Others, such as eliminating taxes on seniors making up to $50,000, were still part of Obama's economic agenda elsewhere.
Success of Each of the Three Components
Obama's tax rebates were supposed to encourage
consumer spending, but many experts doubted it. Why? The rebates showed up as less tax withholding. Unlike the
Bush tax cuts, workers did not receive checks. As a result, most people weren't aware they got a tax rebate.
The Stimulus for Small Business helped create jobs, increased lending from the Small Business Administration and community
banks, and reduced
capital gains taxes for small business investors. The aid helped, but many states were so underwater that their losses outweighed the federal assistance.
The public works construction was probably the most well-publicized. Signs were posted wherever stimulus money was used to construct roads or public buildings. It was estimated to retain or add 3 million jobs, many of which were sorely needed in the construction industry.
Economic Stimulus for Small Businesses
Although most of the media attention was on the $105 billion invested in large banks. But the Treasury's TARP program also invested $92 billion to strengthen community banks across the country. These banks were directed to use the funds to help
small businesses in their local area.
Second, the Economic Stimulus Package included $54 billion in tax write-offs for small businesses.