Snap Fact #276 -The Obama Recovery Act Was a Job Creating Machine! Part 1 of 5

Post date: Aug 15, 2012 1:35:34 PM

Snap Fact #276

The Obama Recovery Act Was a Job Creating Machine!

Part 1 of 5 

If the opposition has one outstanding talent it is their ability to communicate their ideas to the general public. No matter if these ideas have no basis in fact, or worse are the precise opposite of the truth, they misinform a good number of citizens into thinking that what is not so is so.

One good example is the mythology that has been created about the 2009 Obama Recovery Act *(See below). One year after the President signed the Recovery Act, the percentage of the public that believed it had created jobs was lower than the percentage that believed Elvis was alive. But at its peak, the Recovery Act directly employed more than 700,000 Americans on construction projects, research grants and other contracts. 

But the Act was much better yet. Add to the almost three quarters of a million directly created positions the jobs saved or created through the Bill’s unemployment benefits, food stamps and other aid to struggling families who are most likely to spend all receipts rather than save or invest any of the precious few dollars that come into a poor household. Add to that the fiscal relief for cash-strapped state governments; plus the tax cuts for more than 95% of all American workers. In the final analysis most respected independent economists estimate that the stimulus produced about 3 million jobs and added between 2.1 percent and 3.8 percent to our Gross Domestic Product.

The Stimulus didn’t hold unemployment below 8%, as the Obama team optimistically predicted. Unemployment soared past 8% before the stimulus even kicked into gear. It later became clear that the economy was free-falling much faster than the President or the experts realized at the time. But the bill helped stop that free fall. Job losses peaked the month before it passed. The jobs numbers that spring, while grim, marked the biggest quarterly improvement in almost 30 years. The Recovery Act launched a weak recovery, but even a weak recovery beats the almost certain depression that would have befallen the U.S. if President Obama had not stepped in with speedy action.

The nonpartisan Congressional Budget Office estimates that the parts of the program that got the most criticism -- actual spending on projects and aid packages -- were the most effective initiatives in creating jobs. Tax cuts for middle income workers were less effective, while tax cuts for the wealthy were deemed the least effective. 

In spite of the shortfalls, the CBO estimates that at least 1.4 million jobs were created and saved by the direct spending alone, and that as many as 3.6 million jobs were produced while stimulus funds were being spent. Stimulus is no longer playing a major role, but it was never intended to be the source of long-term growth. It was supposed to temporarily fill the hole that the previous administration had created until the private sector stepped in to fill its traditional role of private sector job creation.

Snap Fact #241, 

Stimulus added jobs -- but not enough,


*The Recovery Act

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On Feb. 13, 2009, Congress passed the American Recovery and Reinvestment Act of 2009 at the urging of President Obama, who signed it into law four days later. A direct response to the economic crisis, the Recovery Act has three immediate goals:

The Recovery Act intended to achieve those goals by providing $787 billion in:

In 2011, the original expenditure estimate of $787 billion was increased to $840 billion to be in line with the President's 2012 budget and with scoring changes made by the Congressional Budget Office since the enactment of the Recovery Act. 

To achieve the transparency goal, the Act requires recipients of Recovery funds to report every January, April, July, and October on how they are using the money. All the data is posted on so the public can track the Recovery funds.

In addition to offering financial aid directly to local school districts, expanding the Child Tax Credit, and underwriting the computerization of health records, the Recovery Act is targeted at infrastructure development and enhancement. For instance, the Act provides for the weatherizing of 75 percent of federal buildings and more than one million private homes.

Construction and repair of roads and bridges as well as scientific research and the expansion of broadband and wireless service are being funded.

There is no end date written into the Recovery Act because, while many of Recovery Act projects are focused on jumpstarting the economy, others are expected to contribute to economic growth for many years. 

To view the full bill, click here.