Gary Burtless on the Stimulus

Editor’s note: This article was initially published in The Daily Gazette, Swarthmore’s online, daily newspaper founded in Fall 1996. As of Fall 2018, the DG has merged with The Phoenix. See the about page to read more about the DG.

On Wednesday evening, Swarthmore was visited by economist Gary Burtless, who serves as the senior fellow of Economic Studies at the Brookings Institution, one of Washington’s oldest think tanks. In his lecture, Burtless discussed the recent recession, the government’s response, and why the stimulus package was a lot more successful than people give it credit for.

Burtless began his lecture with a whimsical story about a time his mother watched one of his conferences on TV, a humorously elaborate anecdote explaining why he no longer wears reflective lenses. Then he got down to business, laying out a broad overview of the various government responses to the recession and identifying which were common government responses and which were more unique to this particular crisis.

Among the common responses were tax cuts, extension of benefits like those for unemployment, and investment in capital projects like new roads and buildings. These expenses made up the bulk of the stimulus package. Some more unusual responses were the issuing of health insurance subsidies, grants to state governments, and an emphasis on maintaining education and training services.

Burtless pointed out that since the majority of the stimulus package was made up of common government responses, the package would not have been markedly different had it been designed by Republicans. In fact, the stimulus package presented by Bush had tax cuts almost as high as those issued by Obama. So, said Burtless, the Republican claims to be horrified by the stimulus package simply don’t add up.

Another point of confusion Burtless addressed was the public’s dissatisfaction to the stimulus. He cited a CNN poll in which a majority of Americans said they thought over half of the stimulus package was wasted. This made no sense because, as Burtless showed, over half of the stimulus package was given directly to the public in the form of tax cuts and accrued benefits. In fact, due to government intervention, at no point over the course of the recession did household disposable income fall by more than 1%. So, as Burtless put it, by saying that the stimulus money was “wasted,” the public was saying it was a waste to give the stimulus money to them.

Finally, Burtless stated that the most important thing the government did to combat the recession was to “show willingness to spend vast funds of money” to bail out large institutions. Unfortunately, it’s also this action that has made the government response extremely unpopular with the public, who had to watch the business elites whose mismanagement and greed created the mess get off with essentially a free ride.

Overall, Burtless argued that the stimulus not only followed existing protocol for government response but also did a good job of containing the crisis, preventing it from turning into another Great Depression. However, Republican finger-pointing, Democratic silence, and public dissatisfaction with the slow recovery has created a misleading image of clumsy and ineffective crisis management by the government.

Unfortunately, the overall negative nature of the situation has made it difficult for this image to be dispelled; as Burtless pointed out at the close of his lecture, “Things could have been worse” is not a slogan that wins elections.

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