David Leonhardt, who serves as the New York Times's conscience on economics issues as a columnist and reporter, celebrated the one-year anniversary of the Obama "stimulus" on the front page of Wednesday's Business section, while attacking naysayers as "hard-core skeptics" and pushing for yet another "stimulus": "Success of Stimulus Bill Is Noteworthy as Another Is Weighed."
Leonhardt's column instantly became a gloatworthy morale-booster to sympathetic left-wing web sites like Talking Points Memo and Huffington Post. Even White House Press Secretary Robert Gibbs put it on his Twitter feed. But is Leonhardt bashing straw men?
On Wednesday Leonhardt led his readers, Philosophy 101-style, through a thought experiment:
Imagine if, one year ago, Congress had passed a stimulus bill that really worked.
Let's say this bill had started spending money within a matter of weeks and had rapidly helped the economy. Let's also imagine it was large enough to have had a huge impact on jobs -- employing something like two million people who would otherwise be unemployed right now.
If that had happened, what would the economy look like today?
Well, it would look almost exactly as it does now. Because those nice descriptions of the stimulus that I just gave aren't hypothetical. They are descriptions of the actual bill.
Just look at the outside evaluations of the stimulus. Perhaps the best-known economic research firms are IHS Global Insight, Macroeconomic Advisers and Moody's Economy.com. They all estimate that the and that its ultimate impact will be roughly 2.5 million jobs. The Congressional Budget Office, an independent agency, considers these estimates to be conservative.
After citing support from economic research firms who estimate "the bill has added 1.6 million to 1.8 million jobs," as well as rose unemployment forecasts offered by the Obama White House, Leonhardt admitted mistakes were made but dismissed their import: "The program has had its flaws. But the attention they have received is wildly disproportionate to their importance."
(Last February around this time, Leonhardt was marking "The Upside of Paying More Taxes.")
He continued in his Wednesday column:
Of course, no one can be certain about what would have happened in an alternate universe without a $787 billion stimulus [Ed. note: the Congrssional Budget Office calculates the actual cost at $862 billion]. But there are two main reasons to think the hard-core skeptics are misguided -- above and beyond those complicated, independent economic analyses.
Leonhardt praised the fact the money "has kept teachers, police officers, health care workers and firefighters employed" and that "the billions of dollars in tax cuts, food stamps and jobless benefits in the stimulus have still made a difference."
He concluded his defense of the first stimulus (before offering his suggestions for the next one!) By citing "expectations" that the jobless rate will fall, not actual numbers.
Yet the jobless rate is now expected to begin falling consistently by the end of this year.
For that, the stimulus package, flaws and all, deserves a big heaping of credit....
Some suspect Leonhardt is stacking the deck in Obama's favor. Here's Matthew Continetti writing at The Weekly Standard:
David Leonhardt may believe the "case against the stimulus revolves around the idea that the economy would be no worse off without it," but he's wrong. The case against the stimulus was that it was not the most effective way to respond to the recession. The question has always been whether there was a better way to promote economic growth -- a way that did not involve such long-term costs for such meager short-term gains.
At National Review Online, Reihan Salam took apart Leonhardt's assumptions, and argued:
If Leonhardt intends to knock down a straw-man argument -- ARRA has had no impact and the economy would be in the same shape without any fiscal stimulus program -- he succeeds. But of course economists like Michael Boskin...argued that there were cheaper alternatives that would yield better overall employment outcomes.
