Going in with low expectations -- the result of having sifted through Gross's past writings -- I still managed to be astonished at the weak logic and flim-flammery employed. It was apparent Gross was going to struggle to make his case when he nitpicked early on in the column "To begin with, the stimulus was $787 billion, not $800 billion" as some in the media have reported.
Besides the absurdity of quibbling over what amounts to a rounding error -- really, a difference of less than 2 percent -- Gross might be interested to know that among those who have used the $800 billion figure include...President Obama!
"This notion that somehow I came in here just ginned up to spend $800 billion, that wasn't -- that wasn't how I envisioned my presidency beginning," [Obama] said.Kind of hard to bash people for throwing around a figure the legislation's main cheerleader has himself employed.
But let's move on to the heart of Gross's defense, which is essentially that the majority of the stimulus has yet to be spent:
The more egregious error has to do with the timing. Many critics act as if the entire amount has already been spent. They're completely wrong. Even to argue that it's been half-spent, as the Post, does, is only half-right.This is truly astonishing and requires some real chutzpah on the part of Gross. Essentially he takes one of the biggest criticisms of the stimulus package -- that the spending wouldn't take place in earnest until after the worst of the recession had already passed -- and turns it into a defense. Don't believe me about the criticism? Here is Robert Samuelson in early February:
As was planned from the start, in fact, only a small portion of the $787 billion has been spent. The Council of Economic Advisers recently issued a comprehensive report on the impact of the stimulus. "As of the end of August, $151.4 billion of the original $787 billion has been outlaid or has gone to American taxpayers and businesses in the form of tax reductions," the CEA reports. That's 19 percent. If projections made for September expenditures are right, "between one-fifth and one-quarter of the total $787 billion" was spent by the beginning of October.
Unfortunately, investing in tomorrow won't automatically stimulate the economy today. The $819 billion program passed by the House will only slowly provide stimulus. The Congressional Budget Office estimates that in fiscal 2009 (through this September) about 21 percent of the new spending and tax cuts will flow to the economy. For 2010, the estimate is another 44 percent. The total of 65 percent means that, by CBO's estimate, about a third of the $819 billion package would be spent after fiscal 2010.And here is a Wall Street Journal article from late January:
President Barack Obama's economic-stimulus plan is moving on a fast track through Congress. But Republicans, and some independent economists, are increasingly raising the question: Just how much will it actually boost the economy in the near term?Gross continues:
While the White House says most of the impact will be felt this year or next, and up to four million jobs will be created or saved, congressional Republicans contend that much of the money in the package wouldn't be spent until 2011 or later, when a recovery is likely to be already under way. They add that opening the spigot on government spending has often proven ineffective at softening recessions.
This is not surprising. The ARRA is divided into six different types of components, from tax cuts to infrastructure investments. Some can be done quickly (cutting and mailing tax rebate checks) while others (building bridges) take longer. "The areas where stimulus has been largest in the first six months are individual tax cuts, state fiscal relief, and aid to those most directly hurt by the recession," the CEA reported. Through the end of August, in fact, tax cuts accounted for $62.6 billion of expenditures, and government investment outlays accounted for only $16.5 billion.In other words, it seems the most effective element in the stimulus package is the part that was most favored by Republicans and only grudgingly embraced by Democrats. Again, let's return to the WSJ article:
Democrats have argued all along that tax cuts are a relatively weak way to stimulate the economy compared with direct spending, but they inserted the cuts largely to win Republican votes.In any case, if Gross truly wants to know why the stimulus is a failure, here's the answer:
The stimulus proponents crafted the legislation, projected the benefits, and have failed to measure up. No amount of wordsmithing can avoid or obscure this reality.