As bad as it is, the current recession would have been worse without the stimulus package, according to a recent report by the nonpartisan U.S. Congressional Budget Office (CBO).
The American Recovery and Reinvestment Act created or preserved between 600,000 and 1.6 million jobs so far, the report said. It also has increased economic activity, as measured by the Gross Domestic Product, by between 1.2 and 3.2 percent. It lowered unemployment by between 0.3 and 0.9 percentage points.
These November estimates represent a slight improvement from CBO’s March projections. (They are consistent with private sector economists. Mark Zandi, chief economist and co-founder of Moody’s Economy.com, estimated the country would have approximately 1 million fewer jobs without the stimulus. See here, page 5.)
The Center on Budget and Policy Priorities released a summary of the CBO report. It said the most effective provisions for saving and creating jobs were direct purchases of goods and services by the federal government, aid to states (such as picking up a larger share of Medicaid costs), and transfer payments to individuals (such as increased food stamp support or extended unemployment eligibility).
“CBO’s estimates indicate that tax cuts are less effective job producers, and tax cuts for higher-income people and corporations have very low bang for the buck,” the Center on Budget and Policy Priorities reported.