Two years ago this week the 2009 stimulus package was enacted into law, and, to examine its effects, the House Committee on Oversight—Subcommittee on Regulatory Affairs held a hearing chaired by Jim Jordan of Ohio and ranking Member Dennis Kucinich also of Ohio. The first panel of witnesses consisted of Russ Roberts, J.D. Foster and me. All three of us testified that the 2009 package did little if anything to stimulate the economy. (There was also a second panel which I unfortunately missed.)
My testimony focused on the eight quarters of data since the start of the stimulus which have now been made available by the Department of Commerce, updating a recent study by John Cogan and me. The most striking finding of that data is that only .04 percent of GDP in the large $862 billion package went to federal infrastructure spending, and the large amounts of funds sent to the states for infrastructure spending have not resulted in an increase in infrastructure spending. Raul Labrador of Idaho asked me if the stimulus package would have worked better if there had been more infrastructure spending, but the lesson is that it’s not really feasible to start large government infrastructure projects in a timely enough manner to affect the economy in a recession. There is no such thing as “shovel ready.” In my view we learned that from the 1970s stimulus packages, and indeed it is part of the reason that many of us teach in elementary economics that such discretionary stimulus packages are ineffective.
There were also two missing chairs on the witness panel, which reminded me of an op-ed I wrote for the Washington Post several years ago called “The Empty Chair at the Iraq Hearings.” The name plate on the desk in front of one of the missing chairs said “Dr. Christina Romer” and the other said “Dr. Jared Bernstein.” Of course, Christina Romer and Jared Bernstein were the authors of the influential economic white paper on the stimulus package back in January 2009. They were invited to testify and give their views as the authors of that paper, but they declined. So the Committee decided to set up empty chairs, making a point similar to my earlier op-ed though on a different topic. To be sure, a broader discussion would be welcome.