Money Well Spent?

An Economy on the Brink

America suffered greatly in the 2008-2009 economic downturn. Towns like Elkhart, Indiana, were typical: The area’s economic mainstay – a plant that manufactured recreational vehicles – closed, and unemployment hit record highs. The incoming administration of President Barack Obama held Elkhart up as an example of a community that could benefit greatly from the president’s proposed stimulus package – the American Recovery and Reinvestment Act (ARRA).

The country desperately needed a stimulus. More than two million people across the US were out of work. The housing market had crashed due to the mortgage crisis, and financial markets were crashing with it. Initially, the administration argued that ARRA should be “timely,” “targeted” and “temporary.” It pushed for billions in spending to rescue a “cratering” economy. The Obama administration, the George W. Bush administration and even many economists had misunderstood the gravity of the economy’s condition, an underestimation which forced the new administration to change its goals. It sought to “rebuild” the economy in a “speedy, substantial and sustained” way. Anticipating cooperation from a Congress...