Well, can't get a much better speech title than "So, Is It Working?" That's the question answered in Council of Economic Advisers Chair Christina Romer's speech today, and she answers it with one word: Absolutely. The speech [PDF] itself is actually a nice laymen's primer on fiscal stimulus, worth reading if you don't understand the theory behind the policy. She even deploys the now-famous antibiotics analogy, arguing that medicine still works even if it turns out a fever was worse than initially realized. (I'm actually quite curious to know who first came up with that metaphor.)
Here's perhaps the most relevant graph, demonstrating baseline unemployment and how the stimulus affected it during the second quarter of this year. Essentially, Romer says, the stimulus ensured that Americans have 485,000 more jobs than they would have otherwise, in line with predictions from economists like Mark Zandi.
Romer also trumpets the fact that private analysts all saw the stimulus adding between two and three percent to GDP growth in the past quarter, and notes that across both different countries and different U.S. states there is a correlation between stimulus funding and economic improvement.
I hope that these arguments will dispel the ignorant discussion over whether or not the stimulus is "working." It is doing exactly what economists thought it would, even if the policy wound up being executed in an economic environment that was much worse than expected. There are only two really relevant questions to debate about this program. On the Left, generally, the question is whether or not it is doing well enough. On the Right, generally, the question is whether or not the benefits are worth the costs. But no one should say the stimulus "failed."
-- Tim Fernholz