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As Obama Talks Jobs, Stimulus Remains Divisive

If there is one thing that Democrats and Republicans can agree on after President Obama's first year in office, it's that the $787 billion economic stimulus package is a defining symbol of his nascent legacy.

But when it comes to what, exactly, that legacy is, the White House has been slowly losing the battle of perceptions.

Obama went to the hard-hit battleground state of Ohio on Friday with a retooled message on new steps his administration wants to take to spur job creation.


"I'm calling on Congress to pass a jobs bill to put more Americans to work — building off our Recovery Act — put more Americans back to work rebuilding roads and railways; provide tax breaks to small businesses for hiring people; offer families incentives to make their homes more energy efficient, saving them money while creating jobs," he said at a town hall event.

This new push comes even as the effectiveness of the stimulus, his signature initiative, is shaping up to be a central issue in the upcoming congressional elections.

Data Tell A Confusing Story

Obama's supporters cite a raft of economists who say the American Recovery and Reinvestment Act, passed last February, prevented even steeper job losses and helped to stave off a second Great Depression. The nonpartisan Congressional Budget Office said in November that the gross domestic product in the third quarter of 2009 was between 1.2 percent and 3.2 percentage points higher than it would have been without the stimulus.

But Republicans stepped in with an anti-big government message that attacked the program's spending on infrastructure, education and clean energy programs as a big budgetbuster. It was a huge hit with disgruntled GOP loyalists and a number of independents.


"We saw it resonating with the public over the spring," says Charles Franklin, a political scientist at the University of Wisconsin, Madison, who studies public opinion. "Previous polling had not shown that deficits were at the top of the public's agenda over the past 12 months."

Indeed, the GOP's successful messaging helped fuel the growth of the Tea Party movement, which this week helped Republican Scott Brown win a historically Democratic Senate seat in Massachusetts. That, of course, ended Democrats' Senate supermajority — and endangered the rest of Obama's agenda.

Obama's critics have been helped by the continuing flood of bad news on the jobs front. The unemployment rate, which stood at 7.7 percent in January when Obama took office, has shot up to 10 percent, even with the stimulus spending.

Most economists agree that the economy was even weaker at the beginning of 2009 than many experts, including those at the White House, had realized. But there is little agreement in the political world over what role the stimulus played.

"The problem with the stimulus is that while people have their own direct experiences with the economy, the impact of government action on the economy is almost always subtle and less than powerfully visible," Franklin says.

And, he says, Democrats didn't help matters: "I don't think Democrats did a very good job of selling what they did, either."

Partisan Discord

The irony is that at the beginning of the Obama administration, the economy appeared to be one issue where Democrats and Republicans could work together.

Republicans say that the White House and congressional Democrats made things worse by how they handled the negotiations over the stimulus. Republicans wanted to see a much larger emphasis on tax cuts instead of various spending programs. While Democrats agreed to boost some tax-cut provisions, the bill remained heavily focused on infrastructure, clean energy programs and a range of other "shovel ready" projects.

"It led conservatives to believe that the purpose of much of this spending was not stimulus, but to implement an agenda that Democrats on Capitol Hill had pursued for a long period of time," says Vin Weber, a Republican who was in the House of Representatives from 1981 to 1993 and now works as a strategist. "That's why you hear Republicans say this is just a liberal spending bill."

But many Democrats say that Republicans were simply looking for vulnerabilities in a presidency that enjoyed very high popularity in its early days.

'Bang For The Buck'

The White House, meanwhile, got bogged down trying to defend itself by estimating — and then trying to count — the number of jobs saved or created by the bill [sidebar]. Some supporters say this counting exercise ended up being a distraction from understanding the package's overall effects, because only about a third of the overall spending was dedicated to projects where jobs could even be counted directly.

"I'm a little concerned that the political imperative is to look for jobs you can identify and count," says Chad Stone, the director of federal fiscal policy for the Center on Budget and Policy Priorities. "It tends to obscure the importance of things that don't produce countable jobs but produced lots of bang for the buck, like the extension of unemployment insurance."

The Recovery Act's effects have also been obscured by its own design. The spending was deliberately spread out over the course of at least two years to avoid another crash after the stimulus cash runs out. As of December 2009, only $263 billion of the original $787 billion has been spent, which means that the effects of the stimulus will continue to be felt through 2010.

Some Democrats are arguing that the economy remains fragile enough that even more stimulus measures are necessary. But that promises to be another tough political battle. Some Democratic lawmakers may be reluctant to back big new spending programs in light of their recent losses at the polls, particularly in Massachusetts.

"The stimulus remains a central element, but not the only element, in what will be a pretty ideological contest going into the fall," Weber says. "A serious argument about the size, scope and role of government is not a bad thing to have, and that's what we're going to have. The stimulus is going to get wrapped into that."

Franklin says that Democrats can only hope that the economy rebounds enough to start producing significant numbers of new jobs by the summer.

"If we do see GDP growth coming back and unemployment starting to come down, it might be easier for Democrats going into the fall campaign to claim some success," Franklin says.

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