Obama stimulus deserves at least 'B+'

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In contrast, the Great Recession is just that, a deep recession. Real GDP fell less than 5 percent from the previous peak and started recovering less than 24 months after the recession began. The unemployment rate edged down and probably peaked in late 2009; it barely edged up above 10 percent and was actually lower than the unemployment rate in 1982.

Stimulus Efforts & Results

The standard response to a recession include cutting taxes, spending on infrastructure, and extending unemployment benefits. The Obama administration did all that. Going beyond these measures, Obama's stimulus included health insurance subsidies for unemployed workers, aid packages to state governments, and education subsidies.

Many of these measures played a large role in supporting consumer spending, which is currently close to pre-recession levels. Burtless pointed out that even though real private income fell more than 6 percent, stimulus measures reduced the drop to less than 1 percent. As a result, consumer spending fell only modestly.

The aid package to states dramatically reduced the number of workers state governments had to shed. Burtless highlights that state tax revenues plunged, yet the magnitude of payroll reduction more tame. The aid to states also funded state-level welfare programs, which further cushioned the deleterious effects of unemployment.

Public Perception

Of course, the unemployment rate is still high and the recovery is projected to be modest at best. The American people are obviously still unsatisfied with the current economic situation and dispute the efficacy of Obama's stimulus package. Many Americans complain that stimulus dollars are largely being wasted.

Burtless believes such a “harsh verdict is unjustified.” He quipped that the phrase “it could have been much worse” is unfortunately not enough to pacify the unsatisfied public.