The American Recovery and Reinvestment Act of 2009 (ARRA), commonly called the Stimulus Plan, is widely discredited as having done little to stimulate private sector job growth.
But one thing the Stimulus Plan has created is long-term deficits. The Congressional Budget Office just released a budget report which analyzes (at page 95 of the report, page 113 of the pdf.) the effect of the Stimulus Plan (emphasis mine):
Through last September (the end of fiscal year 2009), ARRA’s effects on spending and revenues appear to have been close to what CBO and JCT had anticipated. The law’s budgetary impact for 2010 is also expected to be near the original estimate. Looking ahead, it appears that ARRA will have larger effects in later years than originallyestimated. All told, CBO now anticipates that the law will increase deficits by $862 billion between 2009 and 2019.
We often hear Barack Obama complain that the deficits are Bush’s fault. And I’m sure that tomorrow night we will hear more of the same during the State of the Union address.
But reality is that the ineffective Stimulus Plan has increased deficits by an average of $86 billion per year, with little to show for it.
Even worse, much of the current year spending went towards subsidizing state budgets. When the funds run out, these states will have to make the hard choices they have avoided for this year, and the “jobs saved” category will disappear because no sustainable long-term economic growth was stimulated.
Which, of course, is Bush’s fault, because examining one’s own failures is not what this administration is about.