Did Obama’s Stimulus Work? Essay
The American Recovery and Reinvestment Act known as the Stimulus was signed by Barack Obama in 2009 in order to respond to the economic recession within the country and overcome the critical situation with the people’s unemployment. The vision of the act’s effectiveness depends on the position of the observer in relation to this or that political party and on the perspective from which it is possible to examine the achievements and failures of the Stimulus.
Thus, Republicans are inclined to concentrate on the act’s weaknesses when Democrats accentuate the successes of the act. That is why, it is inappropriate to rely on the position of the supporters of these two parties.
Moreover, the question of the act’s effectiveness is rather controversial because it is possible to discuss the results from the point of the immediate successes and long-term goals with references to the economic measures which were characteristic for the economic situation before the act’s realization, during the implementation of the definite policies, and after the realization of the main programs planned.
Although there are two opposite points of view, it is possible to focus on the Stimulus as the effective program which could be realized more successfully, but there were some challenges which are important to be discussed.
Today, many economists and politicians intend to assess the Stimulus with references to the results which were achieved according to the planned actions. To understand the situation and credibility of the assessments, it is necessary to pay attention to the goals to achieve which the act was worked out.
The American Recovery and Reinvestment Act was the reaction to the recession processes within the American economy, and the developing situation required the immediate resolution. In his work, Frank states, “every time we checked, the value of our retirement fund had fallen by another third; friends lost their jobs; industries like construction and auto manufacturing came to a standstill” (Frank 11). The major problem was the catastrophic situation in the sphere of employment.
That is why, the main task was to create the new jobs in order to cope with the critical situation. However, the resolution of the problem should be complex, and the other strategies were proposed to recover the economic sphere and provide some important transformations (Miller 168).
The accents were made on changing the approaches to education and healthcare systems and to the other social projects and infrastructure which required the additional investment, and moreover, the question of renewable energy was also discussed.
In practice, the American Recovery and Reinvestment Act was a complex program basing on the resolution of the economic questions directly associated with the social sphere and the public’s employment, but without focusing on the military questions. Frank stresses that the proposed actions were of the “thirties-style”.
Thus, “the brand-new president persuaded Congress to approve a $787 billion stimulus package early in 2009 and to partially reregulate Wall Street. He even managed to push through a universal health-insurance bill” (Frank 35).
According to the more detailed characteristic of the act proposed by MacEwan and Miller, the Stimulus provided $787 billion in tax cuts and expenditures where expenditures “included $144 billion in state and local relief; $111 billion for infrastructure and science support; $155 billion for programs in education, training, energy, and health care; and $89 billion for “protecting the vulnerable” and other programs” (MacEwan and Miller 172).
It is possible to state that the plan to distribute the funds was worked out according to the immediate needs, and the quick results were expected.
Nevertheless, the immediate results did not fit the expected numbers. That is why, the opponents focused on the ineffectiveness of investments in relation to the Stimulus. However, the results were, and they were positive. This fact allows speaking about the act as the working program. Many researchers state that the program was focused on many different spheres when it could be better to concentrate only on the program of employment.
Furthermore, there was no single point in relation to the amount of funds determined to support the program. From this perspective, it is necessary to refer to the opinion of MacEwan and Miller who state that the real problem with the “government’s 2009 economic stimulus program was not that it was too large, but that it was too small.
A program of $787 billion was insufficient … to bring the economy back to an “acceptable” level of output and employment” (MacEwan and Miller 173). Thus, the lack of funds can be discussed as one of the challenges to prevent development of the program and its ending with significant positive results. Nevertheless, the positive results were, and they could be correlated with the amount of investments used.
The Stimulus worked, but it worked not intensively, and those people who did not support the idea of the program were inclined to accentuate the weaknesses of the act instead of concentrating on the positive transformations observed. It is possible to state that the results of the act can be compared with the results of any program developed to overcome the recession processes within the country.
According to Reuss, the “fiscal stimulus is a standard “Keynesian” response to a recession” (Reuss 176). The results of the program are lower in comparison with the expected numbers, but they are rather high in comparison with the measures fixed before the program was started. The new jobs were created, the millions of jobs were saved, and the rate of unemployment decreased. The danger of the significant economic decline seemed to be not as obvious as it was during the year before.
The focus on the healthcare reform, the usage of electronic medical records, the radical reform in education, and the progressive approaches to use the ‘green’ energy can be discussed as the long-term perspectives which results can be assessed only after a long period of time. Obama invested in the economic sectors which required their transformation according to the modern global tendencies.
However, the public expected the immediate results from the unemployment strategy, and it worked because the economic situation of millions of families was changed for better. Thus, the Great Recession is still observed because not all the spheres can be reformed with references to one act and be assessed according to the immediate numbers provided after the realization of the American Recovery and Reinvestment Act.
The critics of the Stimulus program emphasize the fact that the deficit and the other negative tendencies in the economic sphere were provoked by the realization of the American Recovery and Reinvestment Act. However, the researchers state these situations were not connected according to the cause-and-consequence pattern.
MacEwan and Miller develop the idea that the “large deficit in 2009 was not created by the stimulus package”, or “the stimulus package played only a minor role in creating this huge deficit” (MacEwan and Miller 172). Thus, the role of the Stimulus in recovering the economic situation in the USA in 2009 should be discussed with references to the large context because there are many other influential factors which affected the successful realization of the act.
There are two opposite visions of the effectiveness of the American Recovery and Reinvestment Act to improve the economy and overcome the recession. All the possible visions of the question are relevant because the discussion can be based on different approaches to examine the issue.
Focusing on the positive results of the Stimulus program, it is possible to determine the actions which helped to cope with the increasing rate of unemployment within the country and problematic situation within the education and healthcare systems. The opponents of the program state that the unemployment problem was not solved because the percentage of the unemployed persons remained significant.
However, these persons do not pay attention to the fact that the level of unemployment decreased considerably in comparison with the expected numbers in the situation when the program would not have been realized. The danger of the crisis was addressed, but the recession processes were not stopped.
It is necessary to note that the Great Recession remains to be observed because these processes involve all the aspects of the economic life, and the spheres transformed with references to the Stimulus program are not all the problematic fields which require their further reforming.
Frank, Thomas. Pity the Billionaire. New York: Metropolitan Books, 2012. Print.
MacEwan, Arthur, and John Miller. “Moving in a Different Direction”. Economic Collapse, Economic Change: Getting to the Roots of the Crisis. Ed. Arthur MacEwan and John Miller. USA: M.E. Sharpe, 2011. 161-187. Print.
Miller, John. “Stimulating Whining”. The Economic Crisis Reader. Ed. Gerald Friedman, Fred Moseley, and Chris Sturr. USA: Dollars & Sense, 2009. 167-169. Print.
Reuss, Alejandro. “Fiscal Policy and “Crowding Out”. The Economic Crisis Reader. Ed. Gerald Friedman, Fred Moseley, and Chris Sturr. USA: Dollars & Sense, 2009. 176-179. Print.
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