This is encouraging:
Note: I’ve changed my description of Mr. Glaeser’s findings in this earlier post. Yes, I had oversimplified those findings.
This reflects well on Leonhardt, who strikes me as a constructive interlocutor. Leonhardt’s broader point in the post is well taken:
Here’s where the misunderstanding comes in: The term “per capita Federal Recovery Act funds” does not refer to the entire stimulus program. It refers to a relatively small portion of it — the money spent by the federal government on highway projects, other infrastructure programs and the like. As of early June, the government had spent about $61 billion of this money. Another $400 billion of other stimulus money — aid to states, jobless benefits, health-insurance subsidies, tax credits — has also been spent. Mr. Glaeser did not analyze this spending, for some good technical reasons; it would be harder to do so.
In Leonhardt’s view, the bulk of the stimulus spending has been an unambiguous success.
When you look at the program as a whole, the picture is not nearly as uncertain. Home buying jumped during the very period when a tax credit for home buying was in effect. The same happened with corporate investment. State spending stabilized in the middle of last year — just as states were hearing about their stimulus awards — even though state revenues were continuing to fall at the time. Consumer spending has risen faster than income growth would suggest, but about as fast as you’d expect given the combination of income growth and stimulus tax cuts.
One wonders: would a federal stimulus bill that focused exclusively on extending unemployment insurance and stabilizing state spending levels proved as controversial? Alice Rivlin, President Clinton’s OMB director, recommended that the federal stimulus bill focus exclusively on emergency measures, leaving infrastructure spending to a separate package designed to be fiscally sustainable over the business cycle. My guess is that at least some Republican legislators beyond the small minority that voted for ARRA would have endorsed this approach.