One of the common refrains you will hear from pundits this election season is the claim that the Obama stimulus was an utter failure. From the right, it was too large. From the left, too small. Both of these claims fail to grasp the whole picture of the stimulus, both in the effort to get it passed as well as what the stimulus included.
The stimulus bill, officially the “American Recovery and Reinvestment Act,” has produced the desired results. It stopped the hemorrhaging of jobs, preventing the crisis from becoming a full-fledged depression. But more, it invested in modernizing the nation’s aging infrastructure. The top economic forecasters, from JP Morgan Chase to Moody’s, all give it credit for stabilizing the economy as well as the boom in private sector job growth, the largest in 30 years. What is often times forgotten is that of the people who ran for President in 2008, Obama’s proposed stimulus was not the largest. Instead, the largest stimulus proposal was the one by former Governor Romney of Massachusetts.
Thanks to the stimulus, 41 million Americans were able to stop slipping further into poverty. But it is not the largest contribution. While the food stamps, SCHIP expansion, and unemployment extension all did wonders at preventing a second great depression, they were but a minor part of the bill. The larger portion involved the rebuilding and modernization of the nation’s infrastructure.
Thanks to the stimulus, almost $200 billion in both government spending as well as private equity went into energy programs designed to revolutionize the energy grid. Covering a range of programs, from solar to wind, it changed the underlying dynamic of the energy grid we take for granted in the country. Now new powerplants which burn coal but do not release toxic gasses are under construction across the US. Huge wind farms are popping up all across the landscape. Solar went from 290 megawatts output to 1.9 gigawatts last year, with an additional 7 gigawatts under construction right now. And even more importantly, a new form of DARPA, the government research and development program which brought us such breakthroughs as the Internet and driverless car, now focused on energy needs, called ARPA-e.
In the stimulus as well were programs to revolutionize the nation’s school systems. With the Race to the Top program, Obama rewarded innovation and not repetition. The goal being to determine the best paths forward, and to then spread those techniques across this great nation of ours. So far it has managed to generate more return than its meager price tag, and the innovations it is helping to spur have already begun to proliferate throughout the system.
While some believe that Obamacare was the first foray into health reform, the stimulus included provisions for that as well. Part of the stimulus includes provisions for modernizing the healthcare system’s back-end, the migration to computerized records. By so doing, the cost for the health system has shrunk while reducing mistakes. This provided the foundation upon which he later built Obamacare. Countless lives we being saved every day just from the ability to verify medical records, preventing things such as accidental overdoses or dangerous medication interactions.
The stimulus was the largest industrial policy since FDR, the largest anti-poverty initiative since LBJ, the largest middle-class tax cut since Ronald Reagan, and more research money than ever.
But still, some point to the failures, such as Solyndra, in order to classify the whole program as just a political pork puzzle. While some earmarks, such as the notable $1 billion to FutureGen put in by Senate Majority Whip Dick Durbin of Illinois, do exist, the overall stimulus was more notable for how few such earmarks there are. Compared to the 6,376 earmarks one finds in the Christmas Tree transportation bill passed under George Bush, the Obama stimulus looks more like the little tree from “Merry Christmas Charlie Brown.”
Let us focus on Solyndra, however. Even those against Solyndra admit that they have nothing to show any impropriety. What is often times forgotten is that while the US government lost only a small fraction of its loan guarantees for Solyndra, thanks to wise investment in loan reserves and insurance, over a billion in private investor funds were lost on the venture, such as notable Republican investors such as the Walton family of Walmart fame. The failure of Solyndra comes down to failure to anticipate the market. Solyndra’s cylindrical solar panel design was efficient, but costly. The price on solar dropped dramatically during 2009, resulting in Solyndra being priced out of the market they had hoped to capitalize on. This happens regularly in business. However, the price drop was a boon for many other solar companies, which continue to flourish.
The stimulus also insourced thousands of jobs, with overseas companies moving their factories to the United States. From Spain, Germany, Japan, dozens of manufacturers have moved their manufacturing to the United States, to take advantage of the American work ethic and to gain a foothold into the rapidly growing renewable energy market. Some, such as Blade Dynamics Ltd, gained access to surplus facilities, renting them from the government for a profit. Now the same facility which one produced the Saturn V rocket now produces wind turbines which are popping up throughout the midwest thanks to the stimulus.
Some would of course decry the stimulus as not enough, too small as Paul Krugman is often times quoted as having said. However, this ignores the political reality. Some believe, erroneously, that Obama had a filibuster-proof majority in the Senate. This is patently false. Obama took office with 56 Democratic senators, 58 if you include the two independents. Senator Franken’s election results were not confirmed for months, and Arlen Specter switched parties several months into Obama’s first term. By the time Franken was certified as the winner of his seat, Senator Richard Byrd had died, still keeping it at 59. By the time Byrd’s replacement, Carte Goodwin, took his place, Senator Ted Kennedy was deathly ill, only having been able to attend a single vote for the previous three months, and would be dead shortly after. And this is ignoring the “Blue Dog” Democrats such as Senator Nelson of Nebraska, who refused to vote for the stimulus bill if it was any larger. To get it to pass, with the “filibuster everything” Republicans in his way, he needed two Republicans to switch sides. Olympia Snowe and Susan Collins, both from Maine, drew a line in a sand, alongside Ben Nelson, $800 billion and not a penny more.
The legacy of the stimulus will be felt for decades into the future. Between it and Obamacare, this president has written his legacy for generations to come.