Friday, June 8, 2012

UK: The Stimulus "created plenty of jobs"

PJ: Of all the countries affected by the international recession, the US is one of only a few that is showing growth, albeit slow growth. Perhaps critics of Mr. Obama's economic policy need to look further than their partisan noses to see the evidence that the stimulus actually worked and that the fault of the Obama Administration was in not asking for a bigger stimulus package (although he was unlikely to have been granted one by Congress). Contrast the US policies with those in Europe whose support of painful austerity measures has thrown many countries such as the UK into double-dip recessions. As European economies slide and threaten to damage the US's fragile economic recovery, more voices can be heard in support of stimulus vs austerity:

The Economist


The same old debate

Jun 7th 2012, 22:30 by R.M. | WASHINGTON, DC
WHEN nothing is happening in Washington politicians tend to rehash old debates. So it was at Wednesday's hearings of the House Budget Committee, where Tim Huelskamp, a Republican representative from Kansas, confronted Douglas Elmendorf, the director of the Congressional Budget Office, over the supposed failure of the 2009 stimulus package. "Where did Washington mess up?" Mr Huelskamp asked. "Because you’re saying most economists think it should’ve worked. It didn’t."

For Mr Huelskamp, the evidence of failure is the fact that the unemployment rate rose above 8%, despite promises from the administration that it would not. This is a useful argument for Republicans, nicely encapsulated in what Henry Blodget described as "the chart that will get Obama fired". It's also rather flimsy. As Mr Blodget notes, what the chart (and Mr Huelskamp's evidence) really shows is that the administration drastically underestimated the severity of the recession it had inherited and, therefore, overestimated its capacity to turn things around. But the stimulus? Mr Elmendorf says it created plenty of jobs.

Read it at The Economist

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