Carol Shea-Porter - Yes, The Stimulus Did Work

In late 2008, the economy was in free fall.  The daily headlines were downright frightening. Two were particularly ominous: “In String of Bad News, Omens of a Long Recession” and “Next Year Is Looking Even Worse.”  In December, America lost more than 700,000 jobs, and economists worried about a global depression.  They were predicting the longest and most severe recession since World War II.  The New York Times noted the “demoralizing rat-a-tat of grim reports on jobs, sales and public confidence.”  In the wake of that financial crisis, nearly 8 million Americans lost their jobs.

The severity of the economic crisis that President Obama inherited called for strong and prompt action to keep America from slipping into a depression.  Congress passed the American Recovery and Reinvestment Act (ARRA) on February 13, 2009. The goal was to jumpstart the economy by saving and/or creating jobs and by increasing economic growth.  There was money to keep state and local governments afloat, money for infrastructure, a tax cut for 95% of American workers, and tax cuts for small businesses.  The total cost of the package, called  “The Stimulus,” was $787 billion.  It’s been almost three years since the bill was passed, and the two political parties are still fighting about it.  Recently, the nation heard a Republican presidential candidate dramatically insist that the Stimulus had not created a single job.  The question is—did the Stimulus work?

A study by two economists, Alan S. Blinder, a Princeton professor and former vice chairman of the Fed, and Mark Zandi, chief economist at Moody's Analytics, who was presidential candidate Sen. John McCain's economic advisor, said that the government's various interventions averted a second Depression.  In studying the effects of policy responses to the recession, they argue that without the government's various interventions, our gross domestic product would be 6.5% lower, we would have lost 8.5 million MORE jobs, and would be experiencing deflation instead of low inflation.  They conclude that the interventions "reinforced each other," and that "While the effectiveness of any individual element certainly can be debated, there is little doubt that in total, the policy response was highly effective."

What did the stimulus actually do for NH?  Who got the money?  Why do Republican leaders say it failed even as they show up to celebrate the beginning or the end of successful projects?  As mayor, one of our NH Congressmen pushed so hard for money that then-Attorney General Kelly Ayotte accused him of being a “grandstander.”  The Stimulus has been used as a club to beat President Obama and Democrats so often that many believe that the money evaporated without helping anyone.  That simply is not so.

The money was spent to help communities cope with recession.  It helped pay for waste-water treatment facilities and clean water.  It kept teachers working, helped Head Start, and kids with special needs.  Stimulus money was used to provide meals for seniors in centers or at home. It helped homeless children, crime victims, people with brain injuries and many others.  It helped New Hampshire build, repair, and renovate.  Money went to the Portsmouth Naval Shipyard, creating good jobs and bolstering national security.  The National Guard received funds, as did the NH Broadband Mapping Program.  The Small Business Administration was able to expand small business lending.

Money was used for invention and innovation. The Green Launching Pad, initiated by Governor Lynch and the University of New Hampshire, was funded with stimulus funds. Governor Lynch said:

"The first round of the Green Launching Pad has been a tremendous success, benefiting not only those companies that participated, but working to strengthen our state's economy…I am focused on making sure that we are growing the jobs and companies of the future right here in New Hampshire and the Green Launching Pad is just one way we are doing that. The ideas and the products that have been nurtured by the Green Launching Pad are helping create good jobs..."

This plan wasn’t perfectly executed everywhere. But USA TODAY got it right on August 30, 2010 with the headline: “Economists agree: Stimulus created nearly 3 million jobs.” They continued, “Eighteen months later, the consensus among economists is that the stimulus worked in staving off a rerun of the 1930’s.”

I voted for that Stimulus because I wanted to do exactly that—stave off a rerun of the 1930’s. It is time for the political opposition to correct the record and let people know their government did do something good with the people’s money.


Former Congresswoman Carol Shea-Porter represented New Hampshire’s First District from 2007-2011.  She is seeking a third term in the November, 2012 election.  She wrote the proposal for and established a non-profit, social service agency, which continues to serve all ages.  She taught politics and history and is a strong supporter of Medicare and Social Security.