Op-Ed: Economic Equation: Stimulus Equals Jobs

Op-Ed

We recently reached the one year anniversary of the American Recovery and Reinvestment Act, commonly known as the stimulus plan. Some have attacked this important legislation as ineffective, but a host of independent economists disagree. The stimulus package has translated into jobs for millions of Americans, and thousands of Michiganders, who would otherwise be without work, and it was one of the important moves that kept the worst recession in decades from becoming a second Great Depression.

The largest component of the stimulus, almost $290 billion, was in tax cuts. Amazingly, recent polls show that most Americans are not even aware of this. But the average couple received about an $800 tax cut, money that can shore up their finances and put money in their pockets they can spend, thus boosting the economy and creating jobs.

The next largest component was about $224 billion for spending on extended unemployment benefits and aid to state and local governments -- aid that means thousands of Michigan teachers, police officers, firefighters and others are providing vital services today instead of standing in unemployment lines. That's important for them and their families, and also for the Michiganders who depend on them for protection and education.

The final third is money for government grants and contracts, such as spending on road and bridge projects, including more than $1.6 billion in infrastructure projects statewide. These projects will provide both a short-term boost to local employment and the long-term benefits of better infrastructure. And keep in mind, much of the stimulus money is yet to come. As of December, just a little over half of the stimulus package had been spent.

There are those who would argue that although we passed the stimulus, unemployment continued to rise, so therefore the stimulus has failed. This is badly faulty logic. The question is: Are we better off than we would have been without it? On this question, independent, nonpartisan economists are in widespread agreement.

The nonpartisan Congressional Budget Office estimates that without the stimulus, unemployment in the first quarter of this year would be 1.3 percentage points higher. Economist Mark Zandi, an adviser to Sen. John McCain's presidential campaign, estimates that 2.5 million more Americans will have jobs at the end of this year than would have been working if we had not passed the stimulus plan. They are 2.5 million very important reasons we did the right thing. And other independent economists -- from firms that are paid not for their political leanings, but for the quality of their analysis -- have reached the same conclusion.

It's not just economists who see the importance of the stimulus, it's the business community. One local real estate agent told the Kalamazoo Gazette in December: "One of the things driving our market right now is the stimulus."

It's especially important for Michigan that the stimulus package was not just a quick fix, but included items that will be important to our state years from now. For example, the act included $2 billion in grants for companies to pursue advanced auto batteries and other electrical components. Michigan companies will receive $1.3 billion of this money, money that positions our companies at the forefront of a revolution in auto technology, one in which cars with electric hearts will help our environment and reduce our dependence on foreign oil. This is one of the big reasons why, after a long dark night for the domestic auto companies and the suppliers who depend on their business, I believe a new dawn for them is breaking.

The stimulus package did what it was intended to do: prevent a depression and establish the building blocks for recovery. There is no question that we have much more work to do. But it's important as we begin the debate on new job-creation measures that we keep in mind what has already worked.

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