New Fox News Op-ed: Is the Stimulus Working?

This is the beginning of my newest piece at Fox News.

Has the $787 billion stimulus package worked? In California last Wednesday, President Obama declared, “we are already seeing results.” That is in line with the predictions Obama and his advisers made when they warned of dire consequences if the stimulus did not pass.

“If we fail to act, we are likely to lose millions more jobs and the unemployment rate could reach double digits,” Christina Romer, Obama’s chairwoman of the President’s Council of Economic Advisers, warned on February 4.

Obama agreed. “If we do not act, a bad situation will become dramatically worse. Crisis could turn into catastrophe for families and businesses across the country,” he said.

The administration was also very clear about the expected benefits from the legislation. On Jan. 25, Larry Summers, Obama’s chief economic adviser, said that the economy would start improving “within weeks” of the stimulus plan being passed.

The administration made specific predictions about the impact the bill would have. For instance, on Feb. 28, 11 days after the stimulus bill passed, the Obama administration predicted that the national unemployment rate was going to average 8.1 percent this year and then decline to an average of 7.9 percent next year. It also predicted that GDP was going to decline by only 1.2 percent this year.

Such predictions were less pessimistic than those of most economists. While the administration was expecting an average annual unemployment rate of 8.1 percent for the year, business economists and forecasters surveyed in January by the Wall Street Journal expected the June unemployment rate to be 8.2 percent and the December rate to be at 8.6 percent.

How did the predictions stack up? . . . .

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