Skip to main content
On the Record

The Economic Stimulus Bill and the GDP

As President Obama’s economic stimulus bill works its way through Congress, sagging GDP numbers show that this is not a typical recession says Senior Fellow Isabel Sawhill.

Transcript:

“I think the stimulus package has to be evaluated on three grounds. The first is does it do a good job of getting the economy moving quickly, and there I’ve given about an A-minus. Second, I think we have to look at whether or not it’s good policy in terms of reforming programs in various ways that I think many people agree are needed now, and there I give it somewhat lower grade maybe a B-minus, but that has to be understood in the context of there hasn’t been time to do the thorough going reform that maybe needed in some areas. A third criteria is does it balance off the need for short term stimulus with the need for long term fiscal restraint, and there I think it’s lacking, and I give it about a C-plus.”

“…It’s very difficult when you are trying to put together a package that is this large, and do it this quickly to get everything right, so I would give the people who had to work on this a lot of lee way for some errors. We are not going to be able to do this perfectly, so even though I might have wished that there were more program reform in the bill I have to say that that’s not the major purpose of the bill the major purpose of the bill is to stimulate the economy, and on those grounds I have to give it overall good grade.”

“…The recent release of the GDP numbers suggests that we are really in a deep hole, and things are going to get worse before they get better. This is not a typical recession. There have been analysis now that have been done that show if you just look at the recession that have preceded by a financial crisis as opposed to the normal business cycle which is not preceded by financial crisis, those recessions are much longer, much deeper, and require a different kind of policy reform than a normal business cycle, so we are in uncharted waters, we are going to have to try a lot of different things to move forward, and get back to prosperity.”

Get daily updates from Brookings