Texas Governor Rick Perry says the first $787 billion stimulus, in 2009 -- representing 5% of annual GDP -- didn't create any jobs. It's certainly true that the 2009 stimulus did not do what Obama administration economists hoped it would do -- reduce unemployment to 8 percent and put the economy on the upswing growth-wise.
This largely explains the political climate of sourness and cynicism in America today, disillusionment with Obama, Americans' lack of confidence or even pessimism about the country's economic future.
So, where did the first $787 billion stimulus go?
In the spring and summer of 2011, when the first stimulus began to take effect, economic growth was at a standstill and unemployment was stuck above 9 percent. Unofficial unemployment and under-employment probably comprised closer to 15% or even 20% of the potential workforce, and it remains almost as high two years later.
More than one-third of the first stimulus went to tax cuts, and probably another third went to rescue the financial crisis in the states, to fill in the gaps in state funding due to devastating revenue losses on the state level. But now the states, facing extreme revenue shortfalls, are making cuts they delayed for two years ago. They are laying off teachers and other public employees.
The final third of the stimulus -- about $262 billion -- went to projects like infrastructure improvements and Green Energy production.
A breakdown of stimulus projects was compiled by The New York Times.
How many jobs were created by the American Recovery and Reinvestment Act of 2009? The President's Council of Economic Advisers has estimated that between 2.5 million and 3.6 million jobs were created or saved by the stimulus through the fourth quarter of 2010. Just for the quarter April 1 to June 20, 2011, the country had a reported 555,029 full-time equivalent jobs funded by the Recovery Act," according to Politifact. Other independent economic analysts observed that between 1.3 million and 2.5 million jobs were created or saved.
The US spent another $700 billion on TARP -- the Troubled Asset Relief Program -- to bail out the banks. Former Labor Secretary Robert Reich calls it "a miserable failure" in terms of getting money to Main Street, more credit to small businesses, more loans to young people going to college, more help for people with mortgages in trouble. There should have been more regulatory strings attached to that money, he said, forcing banks to loan to people. But he does not believe TARP itself was a bad idea. Without TARP, he said, there might have been "economic Armaggedon...a terrible run on the banks."
And clearly TARP has been at least partially successful. The government made more than $8 billion profit from the Citibank bailout, for example.
Economists Menzie Chinn and Brad Long post a chart showing how the economy would have been much worse without the stimulus. But it was essentially too small and poorly defined to have a big impact on the US economy, Laurence Kotlikoff of Boston University argues.
While it was politically impossible for Congress to pass a much larger stimulus in 2009, in retrospect a larger stimulus would have saved the US money in the long run, reducing unemployment by a few percent and creating millions of taxpaying workers. But that didn't happen. Now Obama has proposed essentially a second stimulus to try to get employers hiring again, build consumer convidence, and get businesses to start spending some of their record earnings on new jobs.