Where you stand on the American Recovery and Reinvestment Act — a.k.a. the stimulus — probably depends a lot on where you sit. For the right, it's a $787 billion failure, wasteful spending of epic proportions — even though much of it consisted of tax cuts. For the left, it was an insufficiently ambitious and timid response to the greatest economic crisis in 80 years. And for the broad middle, it has been a largely invisible abstraction.
According to Michael Grabell, the true answer is that while "the stimulus did a lot of good," with economists generally agreeing that it created jobs and contributed to economic growth, it failed to "live up to the promise of what the American people expected, which was to bring about a strong, sustained recovery."
In Money Well Spent: The Truth Behind the Trillion-Dollar Stimulus, The Biggest Economic Recovery Plan in History, Michael Grabell, a reporter with ProPublica, delves into the origins, design, and roll-out of the stimulus bill. In this detailed, thoughtful, and patiently reported book, Grabell describes how one of the largest government efforts to revive the economy became "one of the most reviled pieces of legislation in recent memory."
Supporters of the stimulus bill note that it is has been misunderstood in some crucial ways. For example, the projections on how it would impact employment and economic growth (which turned out to be wildly optimistic) were made based on data in late 2008 and early 2009, when it was unclear precisely how bad things were and would be in the first quarter of 2009. "They were using old data at the time," said Grabell. And only about one-third of the funds — about $275 billion — were earmarked for investments in roads, green energy, and high-speed rail. Much of the remainder, consisting of tax cuts and aid to states that helped keep existing employees in their job and sustain existing programs, was invisible.
As we discuss in the accompanying video, Grabell is sympathetic to these views. But he also shows how many of the efforts didn't work out as planned — hamstrung by bureaucracy, and by the challenge of creating new jobs and industries in the current climate. Much of his original reporting focuses on Elkhart, Indiana, a center of recreational vehicle production where unemployment spiked to 20 percent. Obama visited Elkhart on one of his first trips as president. In Elkhart, Grabell notes, "there was a lot hope for the stimulus," especially for the potential of companies related to electric car companies to get in on the stimulus action. But Elkhart's economy hasn't been transformed.
Grabell also notes that the stimulus is far from over. "There's still lots of money to be spent." The stimulus bill earmarked $27 billion to support the roll-out of electronic health records, and 2012 is the first year in which funds will be available.
If he was to be forced to give a letter grade, it would be "somewhere between a 'b' and a 'c'," he said. "It certainly helped a lot but it didn't live up to expectations."
Here's some money well spent: send an email to firstname.lastname@example.org, and we'll enter you in a drawing for a free copy.
Daniel Gross is economics editor at Yahoo! Finance
Follow him on Twitter @grossdm; email him at email@example.com