Unemployment and the stimulus

By Drake Bennett and Karen Weise

The American Recovery and Reinvestment Act, signed into law on Feb. 17, 2009, is the biggest stimulus in American history and will ultimately cost an estimated $833 billion. Most of that money has already been paid out in the form of tax cuts, aid to states, unemployment benefits, food stamps, and infrastructure investment. The federal government has since spent nearly $700 billion in additional stimulus. That wasn′t enough to beat the Great Recession, but the Congressional Budget Office credits the Recovery Act with creating or saving 700,000 to 3.3 million jobs in 2010, and 400,000 to 2.6 million in 2011.

NOV. 19

387 economists, mostly liberals, sign a letter to Congress urging a stimulus bill in the $300 billion to $400 billion range.

NOV. 22

President Obama gives an address promising major stimulus: “I have already directed my economic team to come up with an economic recovery plan that will mean 2.5 million more jobs by January of 2011 ... and lay the foundation for a strong and growing economy.”

DEC. 1

The National Bureau of Economic Research announces that the U.S. is officially in a recession that began in December 2007.

DEC. 5

The jobs report reveals that the economy lost 533,000 jobs in November (later revised to 803,000).

EARLY DECEMBER

Economist Christina Romer, in an internal White House memo, calculates that it would take a stimulus of $1.8 trillion to fully counteract the recession.

2009

JAN. 5

Obama meets with legislators from both parties to build support for a $775 billion stimulus plan including tax cuts, expanded health and unemployment benefits, and infrastructure projects.

JAN. 9

A report by Romer and economist Jared Bernstein predicts the stimulus act will keep unemployment below 8 percent (compared with 9 percent without it) and increases the estimate of jobs that will be created or saved to 3 million to 4 million.

JAN. 20

OBAMA IS INAUGURATED

“The state of our economy calls for action, bold and swift. And we will act, not only to create new jobs, but to lay a new foundation for growth.”

JAN. 23

Republican congressional leaders present Obama with a $478 billion alternative stimulus plan that relies solely on tax cuts and unemployment assistance.

JAN. 28

The House passes the Recovery Act with no GOP votes.

FEB. 5

After the GOP launches a PR campaign against the bill, public support for the Recovery Act drops from 63 percent to 51 percent, according to a CBS News Poll.

FEB. 6

The U.S. Chamber of Commerce calls on the Senate to approve the stimulus bill.

FEB. 6

January 2009 job numbers are released: 598,000 jobs lost (later revised to 818,000, the largest monthly drop of the Great Recession).

TAX CUT

FEB. 17

THE $787 BILLION AMERICAN RECOVERY AND REINVESTMENT ACT IS SIGNED INTO LAW

It includes:

$271 billion in jobless benefits and other direct assistance.

$190 billion in tax cuts for businesses and 95 percent of households.

$174 billion in support for local and state governments.

$147 billion in infrastructure and other direct spending.

FEB. 19

In an on-air rant, CNBC editor Rick Santelli accuses the government of “promoting bad behavior” by bailing out reckless borrowers, inspiring the launch of the Tea Party movement.

MARCH 9

The S&P 500 closes at a 12-year low of 676.53.

APRIL 3

Job losses hit 663,000 in March (later revised to 799,000).

APRIL 15

More than 750 tax-day Tea Party protests take place across the country.

JUNE

The recession officially ends.

JUNE 10

The Obama administration bails out and takes over Chrysler and its financing unit. One month later, General Motors gets the same treatment. The federal government spends $85 billion rescuing GM, Chrysler, and some of their suppliers. Taxpayers will recoup $60 billion of that, according to an August 2012 Treasury Department estimate.

JULY 27

Cash for Clunkers takes effect, offering people a $3,500 to $4,500 rebate when they trade in an old car for a newer, more fuel-efficient model. The original $1 billion fund is drained in a week and is briefly extended.

OCT. 7

House Republicans write Obama a letter calling the stimulus a failure: “Nearly 3 million private-sector jobs have been lost in America since the ‘stimulus’ was signed into law, and the national unemployment rate is nearly 10 percent and rising. ... The American people are right to ask: ‘Where are the jobs?’ ”

OCT. 14

Obama proposes sending a $250 stimulus check to all 57 million Social Security recipients because they won’t be getting their annual cost-of-living increase for the first time since 1975.

NOV. 6

October unemployment rate hits double digits: 10.2 percent (later revised to 10 percent).

NOV. 6

The Worker, Homeownership, and Business Assistance Act of 2009 is signed into law. The $32 billion bill includes a renewal of the first-time home buyers tax credit and tax breaks for companies and extends unemployment benefits for an additional 14 to 20 weeks, depending on the state. It passes unanimously in the Senate and 403-12 in the House.

DEC. 4

In the best report since the recession began, only 11,000 jobs are lost in November and the unemployment rate falls to 10 percent (later revised to 9.9 percent). Says Obama: “I’ve got to admit, my chief economist, Christy Romer, she got about four hugs when she handed us the report. But I do want to keep this in perspective. We’ve still got a long way to go.”

DEC. 8

The White House proposes new stimulus that includes a hiring tax credit, capital-gains relief for small businesses, infrastructure spending, and tax rebates for energy-saving home improvements — “Cash for Caulkers” — to be paid with up to $200 billion in unspent bank bailout funds.

DEC. 16

The House approves a $154 billion economic aid package including infrastructure projects, extended unemployment benefits, and aid to state governments. Representative Jerry Lewis (R-Calif.) calls it “nothing short of a taxpayer-funded Christmas shopping spree financed with money borrowed from the Chinese.” A stripped-down version of the bill will become the Hiring Incentives to Restore Employment (HIRE) Act.

2010

JAN. 19

Democrats lose their 60-vote majority in the Senate when Republican Scott Brown wins a special election for the late Ted Kennedy’s Massachusetts seat.

FEB. 11

In a CBS/New York Times poll, only 6 percent of Americans think the stimulus created jobs.

MARCH 3

The Democrat-controlled Senate votes down the extra $250 Social Security payment Obama proposed in October 2009.

MARCH 17

The House passes a three-month extension of unemployment benefits, which lapse for 12 days before the Senate finally passes the bill on April 15.

MARCH 18

The $17.6 billion HIRE Act is signed into law, giving businesses tax credits and payroll tax exemptions for hiring new employees.

AUG. 10

A $26 billion bill that gives states money to prevent teacher layoffs and cover Medicaid payments becomes law.

AUG. 24

A monthly report says existing-home sales fell a record 27 percent to an annual rate of 3.83 million in July (later revised to 3.39 million).

TAX CUT

SEPT. 27

Obama signs the Small Business Jobs Act, which includes new loans and eight tax cuts totaling more than $12 billion for small businesses.

NOV. 2

In the midterm elections, the GOP gains 64 House seats, taking control of the chamber. Obama calls it a “shellacking.”

DEC. 1

A bipartisan commission headed by Alan Simpson and Erskine Bowles proposes reducing the deficit by $4 trillion over 10 years through a mix of entitlement cuts and tax increases.

TAX CUT

DEC. 17

Over Democratic objections, Obama signs an $858 billion bill that extends the Bush-era tax cuts for two more years.

2011

MARCH 2

The House unveils the Reducing Regulatory Burdens Act of 2011, one of at least 24 GOP stimulus bills introduced through the spring and summer that largely focus on cutting taxes and limiting regulation.

MARCH 4

The jobless rate dips to 8.9 percent in February (later revised to 9 percent).

APRIL 8

Battles over the 2011 budget nearly force a government shutdown after six months of stopgap funding. Obama and Boehner finally reach a last-minute compromise to cut spending by $38 billion in the second half of the year.

MAY 5

THE SUMMER OF DEBT CEILING HELL

Obama and Republican leaders begin a long, tense, and ultimately fruitless negotiation to reach a debt deal. Talks between Obama and House Speaker John Boehner break down.

AUG. 2

On the brink of maxing out the country’s borrowing limit, the two sides reach a tentative deal to raise the debt ceiling. It identifies $900 billion in cuts over 10 years and forms a bipartisan supercommittee to find $1.5 trillion more. If the supercommittee fails, automatic across-the-board cuts of $1.2 trillion kick in starting in 2013.

AUG. 5

Standard & Poor’s downgrades the credit rating of the U.S., citing the “political brinksmanship” over the debt ceiling that made the country’s governance less predictable and effective. Treasury Secretary Timothy Geithner publicly criticizes the decision.

AUG. 31

Solar power manufacturer Solyndra shuts down and files for bankruptcy. Under a Recovery Act program, the Obama administration had guaranteed $535 million in loans for the company.

SEPT. 5

On Labor Day, Obama calls for a $50 billion infrastructure plan, which the GOP opposes.

SEPT. 8

In a joint session of Congress, Obama proposes the $447 billion American Jobs Act, which includes payroll tax cuts and $194 billion more in unemployment benefits and other new spending.

OCT. 11

Two Democratic Senators, Ben Nelson of Nebraska and Jon Tester of Montana, join with Senate Republicans in blocking the American Jobs Act.

NOV. 21

The supercommittee fails, triggering $1.2 trillion in across-the-board cuts for January 2013 divided evenly between military and nonmilitary spending. The breakdown sets off a scramble in Congress to undo the cuts, but Obama pledges to veto any bill that does so without a comprehensive debt deal.

2012

MARCH 8

The House passes the Jumpstart Our Business Startups Act, which strips away some investor protections to make it easier for businesses to go public and raise capital. Obama signs the bill into law in early April.

MAY

WASHINGTON SHIFTS TO CAMPAIGN MODE

In the first half of 2012, Congress passes five significant bills. It also renames 14 Post Office branches.

SEPT. 19

Citing its cost, the Senate shelves the Veterans Jobs Corps bill, which would have provided $1 billion over five years to hire veterans for public safety and other government jobs.

OCT. 5

The Labor Department reports that September unemployment dropped below 8 percent, returning to the level of Obama’s first month in office. The employment numbers show the economy has created more jobs than it lost during Obama’s presidency.

SOURCES Bureau of Labor Statistics; Congressional Budget Office; Gallup; Office of Management & Budget; Money Well Spent?, by Michael Grabell; The New New Deal, by Michael Grunwald; The Escape Artists, by Noam Scheiber

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