August 07, 2009 07:20 PM UTC

How's That Stimulus Working Out?

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• by: Colorado Pols

An issue near and dear to the hearts of every Colorado Democrat (not to the mention the Republicans looking to take them out next year), the New York Times reports:

Even as the Obama administration braces for another grim report about job losses on Friday, economists say that the president’s $787 billion stimulus package has helped blunt the downturn in limited but discernible ways.

A report card on the stimulus plan offered by analysts nearly six months after it was passed by Congress suggests that the punch from increased government spending has helped the economy begin to bottom out faster than it would have otherwise. The tax cuts included in the plan, economists said, have had less of an impact because people tended to save the money or use it to pay down debt rather than spend it.

The effectiveness of the stimulus package has emerged as one of the most pressing concerns facing the White House…

White House officials estimate that the stimulus program pumped about $100 billion into the economy through June. That was only a small share of the total projected spending, and much of the first wave came in the form of tax cuts, tax rebates and higher spending on safety-net programs like unemployment benefits and health care.

Private analysts say they think it added at least 1 percentage point to economic growth in the second quarter. That was not enough to prevent the economy from shrinking and joblessness from rising, but the pace of the decline slowed substantially compared with the first quarter.

“The signs of the stimulus are there,” said Allen L. Sinai, chief economist at Decision Economics, a forecasting firm in New York. “Government – federal, state and local – is helping take the economy from recession to recovery. I think it’s the primary contributor.”

But even supporters of the stimulus program say its contribution to a recovery so far has been smaller than White House officials had estimated…but direct government spending on infrastructure projects and other programs that create jobs immediately is only beginning to get under way. Much of the money so far has gone to people in the form of tax cuts and tax rebates, and consumers have tended to save that money rather than spend it.

Oh sorry, we got distracted by all these swastikas and didn’t finish reading. A disaster, right?

Wait, you mean the only part that isn’t working is the tax cuts?