Moving the goalposts on the stimulus...

This was the headline in the papers on the anniversary of the stimulus yesterday:


What a load of crap.

Take a look at the President's speech on the day he signed the stimulus bill one year ago.

Here's a sample that nails what he believed would be the result of the legislation:

Now, what makes this recovery plan so important is not just that it will create or save 3.5 million jobs over the next two years, including 60,000-plus here in Colorado. It's that we're putting Americans to work doing the work that America needs done –- (applause) -- in critical areas that have been neglected for too long; work that will bring real and lasting change for generations to come.

Read the rest of the speech. See anything that talks about how the stimulus will head off a depression? Didn't think so.

Megan McArdle, a brilliant writer for the Atlantic(and a supporter of the stimulus!) even calls Obama out on this outlandish claim from yesterday:

So the main reason we didn't have the Great Depression is that the Treasury intervened to prop up financial institutions, while the Federal reserve pumped money into the economy with a firehose. Special guest star credits go to the FDIC, which prevented the bank runs that crippled so much of our economy in the early 1930s. If you want to credit a government program, credit TARP, not ARRA.

Did the stimulus help? Sure. But Recovery.gov currently has a nifty graphic showing that of ARRA's $787 billion in budget authority, the government has currently disbursed about $287 billion. You'd have to posit some really remarkable multipliers for the stimulus to think that this prevented us from sliding into the Great Depression.

For comparison's sake, in 1930, GDP fell by 8.6% in real terms. In 2009, the BEA says that it fell about 2.4%, or about $300 billion. Had it fallen by anything close to 8%, that would have meant a decline of roughly a trillion dollars.

So the administration is claiming that by spending less than $300 billion, it managed to prevent more than $700 billion in economic decline--in other words, that the multiplier for their spending was higher than two. They're saying that every dollar they spent increased GDP by more than $2.

There is plenty more in her article that details more about the point on multipliers. Check it out.