Commentary | Budget Taxes and Public Investment

The Recovery Act one year later

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One year since the passage of the Recovery Act, its efficacy has been unmistakable.

From the start of the recession in 2007 through the end of February 2009, the economy shed 5.9 million jobs; it shed 753,000 jobs in February 2009 alone. Then the Recovery Act took effect and the pace of job losses immediately began to slow, until job losses were relatively modest by the fourth quarter of 2009.

Of course, zero job growth is unacceptable; we need the economy to start producing jobs in large numbers, and that means we’ll need even more aggressive action to create jobs. But it is entirely wrong to suggest that the Recovery Act didn’t work. The fact is that it did work – precisely as it was designed to work – and it has helped to produce roughly 2 million jobs that wouldn’t exist if the Recovery Act had not become law.

The fact that we’re in such a deep jobs hole despite such large spending on job creation is simply a testament to the massive economic wreckage that the previous administration bequeathed on the current one. It should also be clear by now that deficit concerns should not be a barrier to doing more to create jobs. We have large deficits because we have a severe recession. Creating jobs – and thus increasing the number of people paying taxes – is the first important step to reducing the deficit.”