The anniversary Wednesday of the passage of the Obama administration’s stimulus bill predictably provoked a fresh round of partisan criticism about what the stimulus bill has not achieved. The bulk of that criticism is bogus, however. The stimulus bill clearly is not all that advocates wanted, but it has proved immensely valuable across the country.
In Tennessee and other states, stimulus funds have served, and continue to serve, as a vital safety net, staving off far deeper cuts in jobs and programs in higher education, state agencies, law enforcement, health care and in local government. Many more jobs have been generated in infrastructure projects. Combined, the stimulus package has created or saved just over 2 million jobs.
Millions of citizens have benefited, as well, from extended federal unemployment payments, Cobra health-insurance subsidies, tax cuts and maintenance of private-sector jobs. Indeed, it’s impossible to calculate how many jobs would have disappeared had the Obama administration not acted vigorously to keep the financial implosion of 2008 from turning rapidly into another Great Depression.
Such job-saving, job-creation and aid measures not only helped stabilize public employment, programs and services; the ripple effect also served to cushion the free-fall in vital consumer spending and demand, keeping other businesses viable.
In truth, however, it was clear at the outset that the stimulus package was not capable of producing a bounty of new jobs in the teeth of the Great Recession. It was handicapped from the beginning by a lack of political will on all sides in Washington to boldly fund a stimulus bill large enough to jump-start hiring — if, indeed, that would have been possible under any plan.
The Obama administration initially pushed for a modestly larger stimulus package, but never enough to turn the tide of unemployment that was already on course when Mr. Obama took office in late January last year. The most recent tabulations show that the economy has shed more than 8 million jobs since the Great Recession began in December of 2007. At best, the administration has held a more frightful tide of cuts at bay.
Still, the nation’s current number of jobs is now less than the number in 2001. And given the disintegration of the job base that savaged the economy in the wake of the September 2008 financial meltdown, economists widely believe that job gains, which are expected to begin by the second quarter this year, will be agonizingly slow.
There’s a legitimate reason for that. Much of the disintegration in employment is physical and logistical. As economic analyses show, small businesses are the backbone of the economy and provide more jobs than big corporations. But when small businesses are forced to shut down, they typically sell their plants and assets, and their employees disperse, with many moving to new locations and taking lesser jobs. So even if a former business owner wants to re-start a business, the obstacles are huge: It’s now much harder to get credit, to fund and re-create a new business, and to find new employees with the specific skills that the former employees possessed.
Bigger businesses and corporations face a different circumstance. They’ve become accustomed to leaner operations and outsourcing, and they won’t hire new workers until customer demand becomes overwhelming and seems sustainable.
Neither the Obama administration nor Republicans in Congress foresaw the depth of the recession when they negotiated an inadequate stimulus bill last year, and even then Republicans uniformly opposed it. They said it didn’t focus on business tax cuts (which economists argue do not spur job creation) and they didn’t think it was necessary — never mind that state budgets were cratering and the recession was on the verge of cascading into a depression.
Partisan enmity continues to hamper new legislation to spur job creation, as the latest jobs-bill debacle in the Senate confirms. Regrettably, that’s unlikely to change. If the job base is to grow, entrepreneurial confidence and voluntary retail spending will have to rise on their own.