What Would The Hole Be Without The ‘L’?

It’s a pretty simple question, at least when asked by a member of the American citizenry not already compelled by one bias or another. Did the 2009 “stimulus” bill (American Recovery and Reinvestment Act; or ARRA) work? The answer depends upon who you ask, including breaking down along partisan lines. To Democrat Economists, it absolutely did. For their Republican counterparts, snicker snicker shovel-ready.

What anyone really wants to know is did all that government activity, and there was a lot, did it add something substantial to the positive forces which led to a real economic recovery? That is the question. It’s even in the name.

And nobody wants to tackle it head-on. Instead, even getting away from the partisan bickering you end up in the land of obfuscations anyway; the realm of econometrics. Ask a non-political Economist about the ARRA and you won’t get a straight answer, either; your first clue.

You can go out there and find any number of post hoc analyses of every variety and category. What unites them all is their conclusion, phrased a little differently each time and worded carefully, but all end up sounding pretty much like this one written by the Philly Fed’s staff in 2017:

Did the Recovery Act work? The evidence suggests the economy did indeed grow more than it would have without the stimulus but likely not as much as it might have with a different type of stimulus.

That’s about as honest an answer as you’ll find and it still avoids the main question. “Grow more than it would have” isn’t what’s been asked; the entire issue is recovery, not this idiotic blend of “jobs saved.”

When we use the word “recovery” we mean for it to be literal; as in, get back to where we were before. That’s how the economy has performed in each and every post-war business cycle. It’s exactly what the ARRA planners had told the politicians to promise, too. Make no mistake about this; again, it’s in the name itself.

And referring to each “different type of stimulus”, the Philly research authors (who really are trying to find meaningful evidence) suggest exactly that, though not that it makes any profound difference in economic contribution. This is what I, and they, mean:

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Disclosure: This material has been distributed for informational purposes only. It is the opinion of the author and should not be considered as investment advice or a recommendation of any ...

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