Matthew Yglesias: Mercatus Study Confirms ARRA’s Success
MY:
Mercatus Study Confirms ARRA’s Success | ThinkProgress: First off, what Kevin Drum said here. If the Center for American Progress had done a study of hiring at firms that obtained ARRA funds and discovered that the ratio of previously unemployed workers to previously employed workers was basically 1:1 we would trumpet that as evidence that ARRA was highly successful. After all, the ratio of employed to unemployed workers in the general population was 10:1—big win. That’s even before we consider Jon Chait’s point about the hiring of previously employed workers creating new job openings or general considerations about aggregate demand. The main reason these numbers are being trumpeted as evidence of ARRA failure is that they were produced by the Mercatus Center
But to try to add value, let me say that I think it’s very difficult to evaluate any critique of ARRA that doesn’t include some kind of notion of “compared to what?” At least one read of the Mercatus report is that they implicitly think it would have been better for the Obama administration to propose a targeted make-work program for unemployed people. But knowing libertarian economists as I do, I seriously doubt that if this had been proposed they would have been applauding it. Instead we’d be hearing about how monstrously wasteful it was, how we were promised all these useful projects but just got guys digging ditches instead.
Last, it is worth recalling that the alternative to ARRA that was on the table legislatively was Jim DeMint’s plan for non-offset regressive permanent tax cuts or else simply not doing anything. I didn’t write ARRA, I’m comfortable with the conclusion that it wasn’t an optimally designed program, but I’m also very comfortable with the conclusion that members of congress asked to choose between these options did the right thing by choosing ARRA. Once the thing is passed, everyone kind of gets their back up about “pro” or “con” but that was the debate that was happening at the time—a mixed approach of temporary spending and temporary tax cuts, or a much costlier package of permanent tax cuts.
