Democrats and Republicans used the five-year anniversary of the 2009 stimulus law to debate the measure’s effectiveness, a feud that highlights how the deep divisions over the connection between federal spending and economic growth continue to challenge policy makers.
President Barack Obama, in one his first acts in the White House, signed the Democratic-supported American Recovery and Reinvestment Act of 2009, which was a more than $800 billion combination of new spending measures and tax cuts that Democrats believed would slow the country’s economic slide following the financial crisis. Almost all Republicans voted against the law.
The package included more spending on things like food stamps and unemployment benefits as well as infrastructure programs. It offered financial incentives for people to trade in older automobiles.
The White House on Monday released a 70-page report that said the law “created or saved an average of 1.6 million jobs a year for four years,” and raised the country’s gross domestic product by between 2% and 3% from late 2009 through mid-2011. It said it “initiated” 15,000 transportation projects and helped with the construction or improvement of close to 6,000 miles of railway lines.
On one of the most polarizing points, the White House in its report said the law “had at most a minimal impact on the long-run debt,” arguing that the economic growth caused by the law offset or “eliminated” the costs.
Republicans on Monday had a much different view of the law’s effectiveness, with several party leaders proclaiming the law a failure. Many Republicans in 2009 proposed an alternative package that was comprised of tax cuts for individuals and businesses.
In statements issued by the Republican National Committee and members of Congress, including House Speaker John Boehner (R., Ohio), the GOP reiterated its long standing message that the law was a waste of government money that was ineffective in putting Americans back to work.
“If you recall five years ago, the notion was that if the government spent all this money—that, by the way, was borrowed—that somehow the economy would begin to grow and create jobs,” said Sen. Marco Rubio (R., Fla.), in a video message released Monday morning. “Well, of course, it clearly failed.”
House Minority Whip Steny Hoyer (D., Md.) said that more needed to be done to continue the economy’s recovery—such as raising the minimum wage, reviving benefits for the unemployed and overhauling immigration laws—and he accused Republicans of blocking those measures.
“As we mark this anniversary, I urge Republicans to set aside their partisan agenda and instead work with Democrats to complete the work of our recovery,” said Mr. Hoyer.
Economists disagree about the precise impact of the stimulus law on the U.S. economy, which has improved in fits and starts over the last five years. Many other factors other than the 2009 law—including low interest rates and government efforts to pump capital into ailing banks—contributed to the economy’s turnaround.
Some economists also believe that stimulative effects of the 2009 law have been reversed by spending cuts and tax increases enacted since 2010. Unemployment has dropped below 7%, but that is in part because so many people have stopped looking for work.
The Congressional Budget Office, in a report released last year, said the law as of 2012 likely raised real gross domestic product by between 0.1% and 0.8%, lowered the unemployment rate between 0.1 and 0.6 percentage points, and increased the number of people employed by between 200,000 and 1.1 million.
Write to Damian Paletta at damian.paletta@wsj.com and Janet Hook at janet.hook@wsj.com
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