Obama’s Economic Recovery Plan Already Created, Saved 720,000 Jobs

by James Parks, Jul 30, 2009

President Obama’s economic recovery package created or saved some 720,000 jobs in the second quarter, according to an analysis by the Economic Policy Institute (EPI). Although the economy continued to shrink, the effect would have been much worse without the recovery act, says EPI economist Josh Bivens.

The Commerce Department is expected to announce tomorrow that the nation’s gross domestic product (GDP) dropped by about 1.5 percent in the second quarter, one-fourth the rate in the first three months of the year. Without the recovery legislation, the rate would have been around 4.5 percent, Bivens says. That translates into about 720,000 jobs, he adds.

The personal tax cuts and the one-time payment to Social Security recipients in the recovery package can be expected to raise disposable personal incomes by roughly $37 billion, which should increase consumer spending, Bivens says. Also, state and local governments received $31 billion more to spend on essential services than they would have without the legislation.  

Unfortunately, the overall economy is in much worse condition than what was anticipated at the start of the year, when the recovery legislation was being crafted. The AFL-CIO Executive Council said in a statement this week that the legacy of the Bush administration created such “economic devastation—in finance, housing and jobs”—that  

the challenge of fixing this economic mess is enormous—and urgent. Creating good jobs that cannot be outsourced is central to the solution. 

The council called for urgent action from the federal government in a second recovery plan “to boost economic growth and jobs, and invest in America’s future.” 

Among other investments, a second recovery plan should: 

• Extend unemployment benefits immediately, by at least seven weeks, to help the hundreds of thousands of workers who would otherwise exhaust their benefits in the near term.
• Increase food stamp spending as needed to help families cope with the downturn.
• Increase aid to state and local governments.
• Bolster the financial stability of independent government agencies such as the U.S. Postal Service. 
• Increase spending for needed infrastructure and clean energy projects, even for those projects with a time horizon longer than two years.

Click here to read the full statement.

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