Has the Stimulus Bill Stimulated Much of Anything?

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Are you feeling stimulated? With the jobless rate approaching 10 percent, many observers are saying the stimulus bill isn’t working like it was advertised. As a WSJ editorial notes, all the stimulus money was supposed hold unemployment under 8 percent.

Everyone knows one if not a dozen people who have lost jobs due to the recession. But how many people know someone who has gotten a job because of the stimulus bill? Can you point to a road or bridge or project that’s being built with stimulus money? Most people can’t. So, plenty of folks, including a colleague at Time, are understandably asking: What Happened to the Stimulus?

As the Economist recently noted, two big areas that were highlighted as stimulus beneficiaries haven’t seen many benefits. Spending on green technology seems slow and small-scale, and plans to revamp the nation’s transportation systems are bold but vague.

Has the stimulus bill helped all that many industries, let alone individuals? If the president had done nothing, would we be in any worse shape than we are today? Was the stimulus a waste of time and money? Was it not enough money? Many people are understandably jittery about digging into deeper debt by doubling down (sorry, unintentional alliteration overload) with an even bigger stimulus package.

But that’s exactly what Paul Krugman is suggesting in today’s Times. Based on the latest job loss stats and other economic indicators, Krugman calls for a much, much bigger stimulus plan, and in a hurry. He compares our current economic situation to Japan’s “lost decade”:

The deeper the hole gets, the harder it will be to dig ourselves out. The job figures weren’t the only bad news in Thursday’s report, which also showed wages stalling and possibly on the verge of outright decline. That’s a recipe for a descent into Japanese-style deflation, which is very difficult to reverse. Lost decade, anyone?

And also to the Great Depression of the 1930s:

All of this is depressingly familiar to anyone who has studied economic policy in the 1930s. Once again a Democratic president has pushed through job-creation policies that will mitigate the slump but aren’t aggressive enough to produce a full recovery. Once again much of the stimulus at the federal level is being undone by budget retrenchment at the state and local level.

There’s also the “give it more time” approach. That’s the unsurprising advice given by Christina Romer, chairwoman of President Obama’s Council of Economic Advisers (and a scholar of the Great Depression), in a recent Economist story. She basically says we need to stay the course. We must not revert to normal policy at the first sign of economic recovery. We must plan the transition from recession to recovery carefully, and allow it to happen slowly. We need an “exit strategy,” she writes.

The White House has discussed the possibility of expanding the stimulus, but the most recent statement is that a decision won’t be made until the fall. Until then, try to enjoy the summer—which for a lot of people will involve more free time than they would prefer.