The economy has gotten worse than the Obama administration had
predicted it would be even if Congress had spent nothing on
“fiscal stimulus.” Although some are arguing that this gap is
proof that more stimulus is needed, it really shows that the
cost of the American Recovery and Reinvestment Act of 2009 — and
laws like it — far exceed their benefits in the form of economic
stimulus. By June 2009, the unemployment rate had reached 9.5
percent, as compared to the 7.6 percent it was in January 2009
when Congress passed, and President Obama signed, the $787
billion stimulus bill. The Obama administration had predicted
that the June 2009 unemployment rate would be less than 8
percent — almost a half of a percentage point bigger than it
would have been without a stimulus bill. The Obama team had
predicted that the stimulus law’s effect would always be less
than two percentage points, even at its peak potency. We cannot
blame the Obama administration for failing to predict June’s 9.5
percent unemployment rate. That