It is a sign of the polarized times in which we live that partisans of different stripes can look at the same objective indicators – persistent and increasing unemployment—and come to radically different conclusions about what is to be done. The Republicans see proof in the unemployment numbers that the original stimulus package was ineffective and misguided. The Democrats see it as a sign that the original package was not enough and that we need another one.
Because I like to cast myself as a moderate, let me split the difference. I think the original stimulus package probably was beneficial. It was always unrealistic to think that it would prevent unemployment from going above 8%, but it is equally unrealistic to believe things would be better now without it.
Yet I do not believe another package is what we need for two reasons. The first is that the problem with the original stimulus plan is that the money has not been spent fast enough (mainly because too much of it went for pent up Democratic spending priorities rather than “shovel-ready” projects). So a much better plan would be to reprogram some of the original package toward projects that will spend money more quickly. Helping state governments avoid layoffs might be a good place to start. The second reason that I’d oppose another stimulus bill is that I think unemployment numbers may not be a good indicator of where the economy is going or whether the first package worked. As we observed in last recession (for reasons we do not quite understand), employment and wages only started improving after the economy had recovered. So throwing another batch of stimulus at an economy that may be already recovering would not be prudent.