DEMOCRATS AND Republicans presented two irreconcilable versions of reality yesterday on the first anniversary of the signing of the $787 billion (€578 billion) Recovery Act or stimulus package.
The Democratic version was laid out by US President Barack Obama, vice-president Joe Biden and a dozen cabinet secretaries who were dispatched to cities across the nation to vaunt the merits of the Act.
“We have rescued this economy from the worst of the crisis,” Mr Obama concluded in a pre-scripted, stage-managed speech before Americans who have benefited from the package.
Mr Obama begins most of his speeches by reminding his audience how desperate the situation was when he took office. The crux of his argument is that the recession would have been far worse had he not signed the Recovery Act. The White House cites numerous non-partisan studies that show the stimulus plan saved or created two million jobs, and could create another 1.5 million this year.
But as Mr Biden acknowledged in an opinion piece published by USA Today, people are asking: “How can you say the Recovery Act has worked when the unemployment rate is so much higher today than it was when the Act was signed?”
Unemployment stood at 7.7 per cent in January 2009, and at 9.7 per cent last month. White House chief economist Christina Romer says it is likely to hover around 10 per cent all year.
But jobs are being lost at a tiny fraction of the rate a year ago and, as Mr Obama pointed out in his speech, the US economy was contracting by 6 per cent when he took office, but grew almost 6 per cent in the last quarter.
Not a single Republican voted for the Recovery Act in the House of Representatives, and only three Republican senators approved it.
The passage of the Act signalled the beginning of a chasm between the parties that has continued to grow, resulting in legislative stalemates on healthcare, banking regulation, a jobs Bill, energy and climate change. Anger over the stimulus package also spurred the creation of the anti-government Tea Party movement.
The House Republican leader, John Boehner, led his party’s denunciation of what he called “self-congratulatory ‘stimulus’ spin” surrounding the anniversary. He said the administration’s claim that the stimulus was working was “hopelessly out of touch with reality and has about as much credibility as prior claims that unemployment wouldn’t exceed 8 per cent or that jobs would be created ‘immediately’.”
Mr Obama yesterday mocked Republicans “who have tried to score political points by attacking what we did, even as many of them show up at ribbon-cutting ceremonies for projects in their districts”.
The Democratic national committee has compiled a list of 65 Republicans who voted against the Act but later claimed credit for projects created by it.
Unfortunately for the Obama administration, the public is still hurting from the recession and prefers to believe the Republicans.
A CNN poll released late last month showed three out of four Americans believe at least half the money spent under the Recovery Act has been wasted, while 63 per cent said stimulus projects were purely for political reasons and would have no economic benefit.
Prospects for the November midterm elections look increasingly bleak for the Democrats. On Monday, Democratic senator Evan Bayh announced he would not seek a third term because “there is too much partisanship and not enough progress [in Congress] . . . Even at a time of enormous challenge, the people’s business is not being done.”
Anti-incumbent fever is at an all-time high, with only 34 per cent telling CNN pollsters that most members of Congress should be re-elected. According to the poll, published this week, only 44 per cent believe Mr Obama deserves a second term if he stands for re-election in 2012.