Obama, GOP take stimulus debate online

WASHINGTON -- The money has largely been spent, but as President Obama's $825 billion economic stimulus turns 3 years old today, its substantial, yet still inadequate impact remains the subject of sharp debate.

The White House, the Obama re-election campaign and liberal allies all point to a surging economy, more than 3 million new jobs and an unemployment rate that has finally dropped back near the rate Obama inherited.

Republican presidential candidates and congressional leaders decry high poverty rates and food stamp caseloads, earnings that are not keeping pace with inflation and a declining percentage of Americans in the workforce.

As the two sides prepare for a presidential campaign that's likely to be won or lost on the economy, what's changed is … the economy. Its rebound has prompted Obama to focus less on the recession he inherited and more on the rebound taking shape.

"The month I took office, we were losing 750,000 (jobs) a month. Last month, we created 250,000. That's a million-job swing," Obama said Thursday at a fundraiser in Corona del Mar, Calif. "And that's representative of the progress that the economy has made."

Republicans respond that the "recovery" in the American Recovery and Reinvestment Act of 2009 has yet to materialize, leading to three straight years of unemployment rates above 8% and soaring budget deficits.

"At the signing of the 'stimulus' three years ago, President Obama said he wanted to be held accountable for the results of his spending binge," House Speaker John Boehner said Thursday. "Today, there's no denying the fact that his 'stimulus' policies not only failed, they made things worse."

The rhetoric increasingly is finding its way into charts and videos on the Internet. A simple bar chart from the Bureau of Labor Statistics that shows monthly job creation graces the Obama campaign's website, is used in online advertising and has become the campaign's most shared item on Facebook.

On the other side, the House Republican Study Committee used a Labor Department chart on declining labor force participation in a release Thursday titled, "Where Are the Jobs?"

On Friday, the Obama campaign and Republican National Committee will release state-by-state reports touting their versions of events. The campaign will detail the impact of Obama's policies on manufacturing. The Republicans will focus on states' economies.

The two sides even have produced Web videos claiming that the stimulus succeeded or failed, thanks to the liberal Center for American Progress and the conservative Reason Foundation.

Why the completely different evaluations? Politics, of course. And this: While most economists acknowledge the package of infrastructure spending, aid to states and $300 billion in tax cuts signed by Obama on Feb. 17, 2009, helped stop the bleeding from the worst recession in more than 70 years, it fell short of supporters' predictions.

The Obama team dug itself a hole before it even got the keys to the White House. In January 2009, it released a report that said its stimulus package would hold unemployment below 8%. By October, it hit 10%.

By the time he signed the stimulus, Obama was exhibiting his trademark caution. "None of this will be easy. The road to recovery will not be straight," he said in Denver. "We will make progress, and there may be some slippage along the way … There will be hazards and reverses."

It took more than a year before jobs started coming back, 15 months before the unemployment rate began to decline and nearly three years before the gains became solid.

Along the way, independent analyses gave the stimulus package at least part of the credit. A 2010 report by economists Alan Blinder and Mark Zandi said it boosted economic growth by about 3.4%, held the unemployment rate about 1.5 percentage points lower and added almost 2.7 million jobs.

The non-partisan Congressional Budget Office pegged the number of jobs saved or created by the stimulus at its peak between 700,000 and 3.3 million. Most independent economists estimated the stimulus saved or created about 2.5 million jobs — about 1 million short of what the White House predicted.

The CBO wasn't so generous in a report on unemployment Thursday, noting the 8.3% jobless rate would be about 15% if it included people who have stopped looking for work and part-time workers who want to work full-time. It also noted that more than 40% of the unemployed have been looking for work for more than six months.

The impact of some pieces of the stimulus can be seen more clearly now that the money has stopped flowing. For instance, aid to state and local governments prevented layoffs of teachers and other government workers, says Moody's Analytics chief economist Mark Zandi, a stimulus proponent and former adviser to 2008 GOP presidential nominee John McCain.

That money began to run out in mid-2010, was briefly renewed and began to run out again in early 2011. That set off a wave of teacher layoffs that initially had been avoided. Local governments have cut 200,000 education jobs since June 2010.

"I think the stimulus was a success," Zandi says. "It wasn't intended to provide long-term growth. It was intended to end the recession, and the timeline argues strongly that it did. The stimulus passed in February, the recession ended in June, and job growth resumed in February 2010 and has been consistent since."

Another big part of the stimulus was nearly $100 billion set aside for technology, split between encouraging electronic medical records and promoting clean energy. While loan guarantees to now-bankrupt companies such as solar panel maker Solyndra were controversial, a USA TODAY analysis last fall found tech companies that benefited from the stimulus have outperformed the stock market since.

A third piece of the stimulus, the $14 billion home-buyer tax credit, was criticized for subsidizing people who would have bought homes anyway. But Pulte, the nation's biggest homebuilder, says its 2011 second-quarter home sales dropped 29% after the credit wasn't available anymore.

In addition, the availability of the credit broke the downward psychology gripping housing prices, Zandi said. Nationwide, median existing-house prices actually rose about $1,000 in 2010, to $173,100, according to the National Association of Realtors.

"The evidence is that it helped," says Jared Bernstein, who was Vice President Biden's top economic adviser during the stimulus' rollout. "We wouldn't be where we are today if it hadn't."