Finally, some critics assert that the stimulus package is making the nation’s daunting long-term budget problems much worse.
Not quite. The stimulus will add only about 3 percent to the total budget shortfall through 2050. That’s because the tax cuts and new spending in it are temporary, while the nation’s long-term budget problems stem mainly from ongoing factors, especially rising health care costs and the built-in mismatch between projected spending and revenues.
To be sure, the stimulus package is not flawless. Goldman Sachs argued that a bigger package — one that totaled $1.2 trillion — was needed to offset the drop in private-sector spending.
Nor will every item in the enacted package provide effective stimulus. Congress should have enacted the higher level of state fiscal relief that the administration recommended — so that states’ overall budget cuts and tax increases could have been smaller and states could have avoided some actions altogether — in lieu of several items the final package contained.
But there’s little doubt that the economy is better off because of the stimulus. Without it, the recession would have been longer and deeper, and the number of unemployed Americans would have been even greater than it is.
• Robert Greenstein is executive director of the Center on Budget and Policy Priorities.
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