In the final presidential debate last week, moderator Chris Wallace told Hillary Clinton that her economic plan is “similar to the Obama stimulus plan in 2009, which has led to the slowest GDP growth since 1949.” Donald Trump interjected, telling Wallace that he was “correct.”
But Wallace was wrong. First, the 2009 stimulus didn’t cause the country’s slow growth. Second, Trump, not Clinton, has proposed a historic stimulus, much bigger than the 2009 law.
The $830 billion “American Recovery and Reinvestment Act” — or the infamous stimulus — had three main parts: tax cuts and higher benefits such as food stamps for individuals, aid to state and local governments, and infrastructure investment.
Washington borrowed money to pay for the package. Since the goal of a stimulus is to get more money into the hands of Americans during a recession, there’s no point in doing it if the government pays for it right away via tax hikes or spending cuts. This borrowing, though, helped create the Tea Party, as conservatives became frightened of the growth in the national debt.
Yes, the economy has grown slowly since 2009. President Obama walked into a blunder in early 2009 when he pledged that the stimulus would keep the unemployment rate below eight percent. The unemployment rate peaked at 10 percent that October.
But Mitt Romney didn’t succeed in using this mistake against Obama in 2012. Americans intuited that the 2008 crisis...
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Nicole Gelinas is a senior fellow at the Manhattan Institute and contributing editor at City Journal. Follow her on Twitter here.
This piece originally appeared in The Boston Globe