Five years after becoming law, the American Recovery and Reinvestment Act of 2009 — better known as the “economic stimulus” — remains controversial and divisive. Its birthday has triggered retrospectives that suggest a tentative verdict on its usefulness.
The main contribution comes from the White House’s Council of Economic Advisers (CEA). In its annual report, it reminds us that the original “stimulus” (the ARRA), costing about $800 billion, was only half the show. As its impact waned, the administration and Congress enacted other like-minded measures — the biggest were the two-percentage-point cut in Social Security’s payroll tax and the extension of unemployment benefits — with a price tag of roughly $700 billion. The term “stimulus” was dropped because it proved politically toxic even if many underlying programs were popular.