Too Soon To Judge the Stimulus Package

Much debate has raged over the stimulus package rammed through Congress mostly unread in the opening days of the Obama Administration. "It's working," the President declared recently. But given that the promise was the stimulus would hold unemployment to 8% and it's already reached 9.5% skeptics have naturally pointed out the discrepancy. The problem with assessing whether the stimulus plan works is that you first must understand what it's purpose is.

When it was being proposed and (rapidly) debated in Congress, conservatives pointed out that it was a quick fix for anything because the spending was backloaded--by design, most of the money was to be spent in 2010 or later. For all the talk of "shovel-ready projects" and the urgency to pass it immediately, there had to be another purpose. I think the key is found in the number 2010. The stimulus package had a major purpose and a large side benefit. The side benefit was to reward Democratic constituencies (something on which much Republican ire focused) but that was not the main design. The main purpose of the stimulus package was to help Democrats win in the 2010 election.

We won't be able to judge whether the stimulus "worked" until those results are in. The stimulus as passed was never going to make much immediate impact on the economy. And by virtue of the fact that it only stimulates growth of government and bureaucracy rather than private enterprise it was never going to create real wealth and prosperity. The remainder of this year is going to be tough. Unemployment will almost certainly top 10% by this fall and the housing market continues to be an anchor dragging the entire economy down.

The real question will be whether the economy begins to recover before mid-2010. If it does (no thanks to the stimulus, but the Mainly Socialist Media will give all credit to The One anyway if it does...and probably try hard to cover for him if it doesn't) then the GOP will sink even further. If there is no recovery, the shoe will be on the other foot. For a preview of what an election in a bad economy will look like next year, simply look at the polling data for this year's races for governor in Virginia and New Jersey. Obama carried both states--VA was close and NJ was a blowout. But the Republicans are polling way ahead in both races.

Obama has staked a lot on the stimulus package. And he knows it's a gamble. That's why he's pushing so hard to get health care, cap and trade, bank reforms and more through Congress. This year may be (please, Lord, make it so) his only chance.