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Monday, June 27, 2011

Obama's Economic Stimulus: Insufficiently Focused

The $800 billion stimulus law had as much (or more) to do with improving the education system and rail lines, installing universal broadband, and modernizing electrical grids as reducing the unemployment rate. Consequently, the best that can be said regarding the spending is that it probably played a role in keeping unemployment from getting even worse than it did. 

As an alternative, Barak Obama could have proposed something akin to Roosevelt’s Civilian Conservation Corps (CCC), which was a public work relief program for unemployed men between the ages of 18 and 24; the program ran from 1933 to 1942. The corps was primarily geared to providing work (and a pay check) to unemployed youth. The conservation and development of natural resources in rural areas of the U.S. was merely the application. The CCC was the most popular New Deal program among the general public, providing jobs for 3 million from families on relief.

Essentially, had providing an on-going paycheck to those on or off unemployment compensation been Obama’s priority, the president would have sought more labor-intensive uses for the $800 billion. A new CCC for men and women over 18 could have operated in many towns and cities throughout the U.S. In keeping with the enumerated powers in American federalism, the federal government could have made the funds available for states to use (or not use) as they saw fit.  Job retraining oriented to vocational areas least over-supplied could have gone along with the program.

In short, the $800 billion could have been more focused on the immediate problem of unemployment.  This would not have hurt Obama’s prospects for getting re-elected. I am not surprised that the republicans are able to portray the stimulus spending as ineffective with respect to jobs, though to ignore the unemployment problem or argue that a tax cut would somehow prompt companies to hire seems naïve at best.

Please add a question or comment on the New Deal versus Obama’s stimulus program.


Matt Bai, “Crisis Past, Obama May Have Missed a Chance,” The New York Times, September 8, 2010.