They were brought to us by eight of the surviving members of the 1968 Memphis Sanitation Strike, who came to the White House today for the first time in their lives.

President Barack Obama talks with participants from the 1968 Memphis sanitation strike, an iconic campaign in civil rights and labor rights history, during a meeting in the Map Room of the White House, April 29, 2011. (Official White House Photo by Lawrence Jackson)

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If that long-ago strike sticks out in your mind, it’s because Dr. Martin Luther King went to Memphis to support the almost entirely African-American sanitation workforce as they struck for union recognition, better pay, safer working conditions, and, fundamentally, respect.

It was there, on April 3, that Dr. King delivered his “I’ve Been to the Mountaintop” speech.

And it was there, on April 4, when that amazing man was taken from us.

Please, if you do nothing else today, read (or reread) that speech.  Read it to yourself, to your partner, to your parents and to your kids.  You would be hard-pressed to find another document that so perfectly weaves together the beautiful yet all too fragile fabric of the historical struggle for basic human rights.

And what’s so remarkable about the way Dr. King told the story that day was not the pain, frustration, and violence of that endless struggle for justice, but the hope, the optimism, the non-violent sensibility, and most profoundly, the faith that he brought, and urged us all, to bring to that struggle.

A key theme of the speech, one that resonates today as well as it did in 1968, is the inseparability of social and economic justice.  Dr. King’s civil rights work is of course well remembered, but you may not recall that toward the end of his life, he led the “Poor People’s Campaign,” a movement organized around the need for jobs, health care, and housing for the poor and disadvantaged.

As embodied in those striking workers in Memphis, and stressed repeatedly in his speech to them, the issue was, and remains, one of fairness.  These men here today and their former cohort faced hard, even fatal working conditions (weeks before the strike, two men were killed on a city truck).  Yet, they also faced deep discrimination and earned poverty-level wages.

So they decided to join a public-sector union—to tap their collective strength in pursuit of the fair treatment that eluded them as individuals.  The mayor of Memphis declared the strike illegal but the workers, with Dr. King’s support, never gave up.  And ultimately, they succeeded.  Less than two weeks after King’s tragic assassination, the union was recognized and the strike ended.

Of course, that’s not the end of the story.  The struggle to protect and add to the gains that Dr. King and those Memphis workers fought and died for is a lifelong one.  It’s a struggle that President Obama knows well, and one he continues to wage each day.  It’s a struggle that persists to this very day, as public-sector workers continue to fight for the right to bargain collectively.

But to see these eight men come to the White House and meet with this President…well, there really are no words to describe the moment other than to say that somewhere, from a distant mountaintop, Dr. King smiled down on the world today.

Jared Bernstein is Chief Economic Advisor to the Vice President

One useful thing to do with these data is to average over a few months, to smooth out some of the jumpiness in the monthly numbers.  And when you apply this smoothing to private sector job growth, a promising pattern emerges.

The figure below takes an average of monthly job growth in the private sector over the past three months (Dec, Jan, Feb), and compares that to the same average last year and two years ago.

Two years ago, when President Obama took office, we were hemorrhaging jobs at a rate of over 700,000 per month.  Our Administration attacked the problem, first with the Recovery Act, and later with a broad set of initiatives to put more money in family budgets, free up credit for small businesses, and most recently, boost paychecks with a temporary payroll tax cut.

As you can see, the rate of job loss diminished significantly by last year at this time, down to 55,000 a month.  Then, in March of last year, the private sector began adding jobs on net, and has been doing so every month since, to the cumulative tune of 1.5 million so far. And as you can see, over the past three months, private sector employers have been adding 152,000 per month, on net.  

Now, let’s be clear about this: we’ve still got a long way to go.  While the unemployment is also trending the right way—down from 9.8% last November to 8.9% last month (although these numbers are also jumpy month to month)—the jobless rate remains much too high, and employers need to add millions more jobs before working Americans face the opportunities they need and deserve.  

We also need to protect these friendly trends by avoiding policy mistakes, like cutting back on investments that will propel economic growth, such as the President’s innovation, education, and infrastructure initiatives.   It’s measures like these that will help kick the jobs trend in high gear and win the future.

Like I said, we’re not there yet, but the only way to get there is to head in the right direction.  And as the figure below shows, that’s what we’re doing.

Jared Bernstein is Chief Economic Advisor to the Vice President

Some interesting and provocative answers to that question can be found in a new report out today, entitled A New Way of Doing Business: How the Recovery Act is Leaning the Way to 21^st Century Government.

Now, I understand that implementation of government programs is not a topic that immediately grips the attention of a normal person.  But even if you’re not a propeller-beanied policy wonk, this report is worth a look.

Why?  Because it presents a chapter in the story of rebuilding faith in the ability of the Federal government to get things done effectively and efficiently. 

We live in an era where folks too easily expect government programs to be badly run, but one of President’s top priorities on coming to Washington was to change this expectation.  And there’s only one way to do that: by running things right.

The Recovery Act met every one of its goals on or ahead of schedule, including, most importantly, the saving or creating of 3.5 million jobs.  Thousands of projects came in under budget, thus allowing for more projects to be undertaken.  Tax cuts lifted the incomes of millions of families, loan guarantees reached thousands of small businesses, and investments in the future are planting the seeds of vital new industries.

The report documents four lessons learned in the process: constant oversight is essential, transparency drives accountability, collaboration breaks bureaucratic barriers, and competition brings results.

Let me say a little bit about the last lesson—introducing competition into the process—because, as an economist, I view this as a particularly important innovation for government work (check out this article for more on this point).  It’s also a lesson you’re going to see a lot more of as we work to promote the President’s innovation agenda.

There was not one earmark in the Recovery Act.   Instead, many of the grant programs in the Act used merit-based competitions as a way to get the biggest bang for the buck.  These competitions incentivized bureaucrats to get off of the old formula-based approaches and get their creativity on.

The Department of Education’s Race to the Top is perhaps the most widely cited example.  The department set out broad, common sense goals and asked states to develop plans that fit the specific challenges they faced.  Not only did this unleash the creative juices of educators across the land, it sets up dozens of laboratories conducting natural experiments so we can evaluate what works best.   This never would have happened under the old cookie-cutter approach.

The Energy Department got into the game as well, introducing competitions to transform the energy sector in ways that would promote clean energy, create good, private-sector jobs here at home, and start sliding down the marginal cost curve as quickly as possible.  As one result of this work, the department now expects that the cost of a 100-mile-range electric vehicle battery could drop from $33,000 to $10,000 by the end of 2015. (See here for a new report on green jobs created by the Recovery Act.)

There are many more examples in the report and the article linked to above.  But the point is simple—by introducing competition into the mix, we engender a very different kind of stimulus: one that stimulates brain cells and creative, outside-the-box, non-formulaic thinking. 

That just so happens to be the story of American innovation.  And it’s one way the President is re-inventing government for the 21^st century.

Jared Bernstein is Chief Economic Advisor to the Vice President

As the President said Monday, this is a budget designed to help America win the future by out-innovating, out-educating, and out-building our global competition.  But in order to afford those investments, the government needs to start living within our means.  So we’re proposing over $1 trillion in deficit reduction, of which two thirds comes from spending cuts.

Yet we cannot abandon the needs of working families at this point in our economic recovery.  Yes, our cuts have involved tough choices, and they will require sacrifices from many Americans.  But there’s also a lot in this budget to help middle-class families get back to work, afford college, to protect them at work, and strengthen their retirement.

A few examples:

• Cutting Taxes for the Middle Class: Late last year, the President and Congress reached a bipartisan deal to cut taxes on middle-class families, which is reflected in the President’s budget.  The deal included income tax cuts and a temporary payroll tax holiday that, taken together, will mean that typical families will see thousands of dollars more in their paychecks this year.
• Helping Keep Child Care Affordable:  The Budget proposes to expand the Child and Dependent Care Tax Credit, which helps families cover the rising cost of child care.  Our proposal will nearly double this tax credit for families making less than $75,000 a year, and nearly all eligible families making less than $103,000 a year will see their credit increase.
• Helping Students and Their Families Pay for College:  The Budget proposes to build on the gains we’ve made over the last two years in boosting college affordability, including permanently extending the President’s new American Opportunity Tax Credit, which provides students and their families with a tax credit of up to $2,500 a year to help pay for college.  The Budget also makes the tough choices necessary to maintain the $5,550 maximum Pell Grant award.
• Strengthening Retirement Security for American Workers:  The Budget proposes to give more workers access to better retirement savings options by requiring employers who don’t already offer a retirement plan at the workplace to automatically enroll their workers in a direct-deposit IRA.  Workers will be able to opt out of these automatic IRAs if they choose, and the smallest employers will be exempt, but this proposal will help provide an easier and better way to save for the 78 million Americans who don’t currently have a retirement plan at work.
• Providing Support for Family Caregivers: The Budget proposes to devote $96 million to the Administration's Caregiver Initiative, an effort to expand assistance for families and seniors so that caregivers can better manage their multiple responsibilities and seniors can live in the community for as long as possible.
• Investing in Infrastructure and Clean Energy to Create Jobs Here in America:  The Budget proposes several major investments in infrastructure and clean energy that will increase American competitiveness and create jobs.  These proposals include making major investments in roads, rail, and high-speed internet, extending a highly effective clean energy manufacturing tax credit, and improving incentives for purchasing electric cars.  

Some will argue that the goals of fiscal discipline and investing in the middle class are mutually exclusive.  President Obama does not believe so, which is why this budget embodies the reality that we must do all we can to meet both of those goals.

Jared Bernstein is Chief Economic Advisor to the Vice President

Well, I’m here to tell them that it did.  A lot.  Or, to be more precise, by $240 billion so far, going up to nearly $290 billion before we’re done (assuming Republicans fail in their efforts to raise your taxes by canceling the rest of the tax breaks, something they’ve pledged to do). 

Those tax cuts have helped American families make ends meet.  They’ve helped them pay their kids’ college tuition, cover the cost of health care, and even offset the costs of energy-efficiency improvements to their homes.  And they’ve helped move the economy from free fall to growth.

As the Times article points out, there are good reasons why folks may not be familiar with these tax cuts.  For example, even though the Recovery Act provided states with billions of dollars to help avoid Medicaid cuts and keep teachers on the job, some states were forced to go the other way, raising taxes to help offset their budget shortfalls. 

Take another example—the Making Work Pay Tax Credit.  It reached 95% of working families—over 100 million American taxpayers, more people than any other tax cut in the history of tax cuts.  Taxpayers received up to $800 through the credit, which came to them incrementally by reducing how much money was withheld from their paychecks for taxes both this year and last.

This incremental nature probably explains part of the lack of recognition—if you get a tax credit little by little instead of all in one big check, you’re less likely to notice that your income went up.  And of course, there’s been a lot of very tough stuff going on with people’s jobs and paychecks throughout this downturn.  But the data confirm that workers are spending the benefits they got during this period.

Look at the following graph, which first appeared in this analysis by Gary Burtless of the Brookings Institute (we’ve updated it).  As Gary put it:

The severity of the recession caused private incomes to plunge…[but] Federal government programs and stimulus dollars cushioned the massive blow to private family incomes.  Disposable income fell less than 1 percent after the start of the recession, a stunning fact too often ignored given the severity and length of the current downturn.

The bottom line shows how much income folks got from the private sector, from paychecks, profits, and capital income.  The top line shows their take-home, after-tax disposable income, including benefits like Social Security and Unemployment Insurance.  And as you can see, even as private income has fallen, disposable income has remained steady, thanks in large part to reduced tax payments and higher benefit payments to folks hit hard by the recession.  

The gap between the two lines is historically very large, and it’s a great picture of the Recovery Act at work.  To be clear, we’re not claiming—not by a long shot—that these tax breaks offset anything approaching the full spate of economic pain families are experiencing as a result of the Great Recession.  But we are strongly asserting that they helped.  

In fact, as you can see in the chart below, consumer spending is almost back to its pre-recession peak, suggesting that families have been using these tax cuts and benefits to make ends meet.

And as I noted, there’s a lot more than Making Work Pay at work here.  Other key Recovery Act tax credits include:

• The American Opportunity Tax Credit, which gives students and families up to $2,500 in tax savings to help pay for college tuition and other expenses.  The AOTC and other tuition benefits have helped more than 12.5 million students and their families pay for college, an increase in tax benefits for higher education of more than 90 percent from the year before (see here for details).
• The Earned Income Tax Credit, which helps moderate-income working families make ends meet.  The Recovery Act increased the credit for families with three or more children, bringing the maximum amount to $5,657.
• The Child Tax Credit, which helps low-and moderate-income families with children.  More families are benefitting from the child tax credit under the Recovery Act, which reduced the minimum amount of earned income used to calculate the additional child tax credit to $3,000 from $12,550.  
• COBRA and Unemployment Benefits:For those who lost their jobs in the recession, to help them get back on their feet, the Recovery Act provided a 65 percent tax credit to help cover the cost of health care and made the first $2,400 in unemployment benefits tax-free, when normally 100 percent of those benefits are taxable.
• Energy Efficiency and Renewable Energy Incentives: Taxpayers are eligible for up to $1,500 in tax credits for making some energy-efficiency improvements to their homes such as adding insulation and installing energy efficient windows.

Moreover, the President continues to support significant new cuts, to middle-class families and to small businesses, to help preserve the gains we’ve made so far and build on the economy’s momentum.  

Like I said, there’s a lot of moving parts when it comes to taxes, and families have enough to deal with these days without taking a quiz on how changes to the tax code have helped them.  But the facts, supported by clear evidence, are that President Obama has presided over hundreds of billions in tax cuts that continue to help families get through these tough times.

Jared Bernstein is Chief Economic Advisor to the Vice President

One difficult challenge these communities face is how to move old and abandoned properties back into productive use. Too often, a combination of insufficient resources, uncertain environmental liabilities, and inadequate commitment from responsible parties puts shuttered facilities in a devastating limbo for years or even decades.  Empty buildings and chain link fences not only represent lost opportunities but have the potential to create a vicious cycle, driving down property values increasing crime and keeping communities from moving their economies forward.

That is why today’s announcement of an agreement between the Old General Motors and federal and state governments to establish a trust to clean up and repurpose 89 properties left behind in the GM bankruptcy is so significant. In total, this agreement will commit nearly $800 million to support clean up and redevelopment at these sites.  It is not only the largest and most inclusive environmental trust in United States history, but it provides a mechanism to break this cycle in communities across the country. 

The details of the agreement are here, but the concept is pretty simple – by providing necessary clean up costs along with a coordinated framework for addressing environmental liabilities, communities will be given a chance to see much quicker reuse and redevelopment than would otherwise be the case.  And they’ll create some good jobs along the way.

The trust will be administered by Elliot Laws, who previously served at the Environmental Protection Agency. He will work closely with state and local communities when selling or repurposing the properties, to ensure that the reuse creates more jobs in the community and that state and local views are taken into account.

It’s a good example of what is possible when government agencies at the federal and state level come together to find creative ways to solve problems. And for communities across the country it means economic development and jobs for middle class families.

Jared Bernstein is Chief Economic Advisor to the Vice President

That’s why we here at the Middle Class Task Force are excited that today, the Department of Labor is announcing new rules that will help make this principle a reality by requiring 401(k) providers to disclose key information to plan participants about their fees and expenses.  It also makes sure that plan providers present investment options in a clear, apples-to-apples way that will help the 72 million participants in 401(k)-style retirement plans make better choices.  It’s a common-sense step toward improving the retirement security of American workers, and it’s one we should all be able to get behind.

Retirement security has been one of the Middle Class Task Force’s top priorities since day one.  When the President created the Task Force less than two weeks after he took office, retirement security was one of the topics he explicitly assigned us to focus on.

So we’ve been working on ways to strengthen the retirement security of American workers ever since.  When we released our first annual report earlier this year, we wrote about a number of retirement security proposals, including an idea for helping workers automatically save money in Individual Retirement Accounts; an improved tax credit for retirement savings; and a set of new regulations to improve the transparency and reliability of 401(k)s.

The fee disclosure rule that our Administration is announcing today is one key piece of that agenda.  By requiring 401(k) providers to disclose their fees and expenses to the workers who use their products to save for retirement, this rule will bring more transparency to the system and make sure workers know what they’re getting.

And by giving workers the information they need to be better-informed consumers of retirement savings products, the rule will help ensure that their retirement savings aren’t eroded by high fees and expenses, so they can get the most out of every dollar they put away.

We’ll keep working on new ways to strengthen retirement security for American workers.  But today, we’re happy that this Administration is taking one more step to give you the tools you need to make informed choices about how to save for the retirement you deserve.

Jared Bernstein is Chief Economic Advisor to the Vice President

A new report out finds that over 99.8% of these checks were delivered accurately. Of the remaining 0.2% (two-tenths of one percent), more than half have already been returned, meaning the “error rate” is 0.1%. Now, we strongly believe that no inaccuracy is acceptable, but magnitude matters here. Over 51.8 million individual checks worth over $12.9 billion were swiftly and accurately delivered to eligible recipients.

As to that 0.1%, let’s examine its size in historical context. In fact, the approximately 72,000 Recovery Act checks sent to people who had fallen off of the Social Security rolls because they passed away is a whole lot smaller than the more than 2 million checks worth as much as $1.5 billion that erroneously went out under the Bush tax rebate plan in 2001. [Los Angeles Times, 6/3/01] It’s also the case that the Social Security Administration is constantly updating its database, and government programs having to recover a small number of payments as eligibility changes is not uncommon.

That said, we still think it should continue to become far less common – and we won’t stop working on improving this process until we have an error-free program. And this doesn’t just apply to the Social Security Administration - the Administration has already taken aggressive new actions across the government to combat payment errors and ensure even higher accuracy rates than those reported today. But for the nearly 52 million Americans that received these checks, there is no question that in a time of great need, the Recovery Act delivered.

So when you hear a Republican Senator saying this morning “I strongly opposed this failed spending,” ask yourself, is he really willing to look 52 million Americans in the eye and tell them they didn’t need that $250 check?

Vice President Joe Biden attends a Middle Class Task Force event at the home of Lorie and Robert Cochran in Manchester, New Hampshire, September 27, 2010. (Official White House Photo by David Lienemann)

Fortunately, the grim weather didn’t put a damper on our conversation.  After some brief opening remarks by the Vice President, we launched right into a great discussion, with the audience asking about the steps we’re taking to create jobs and get our economy moving again.  The Vice President took the opportunity to discuss our agenda for creating jobs, including more tax cuts for small businesses that want to expand and hire, infrastructure investment to build on the momentum of the Recovery Act, preserving tax cuts for the middle class, making college more affordable, and reducing health care costs while protecting health care consumers.

As you’d expect in a political season in a highly politically engaged state, other questioners asked about the upcoming midterm elections.  And on that subject, Vice President Biden stressed the stark choice voters will face on November 2: will we continue moving forward, building on our economic progress, making sure that insurance companies and banks are playing by the new rules of the road, and pursuing a policy agenda focused on the prosperity of the middle class?  Or will we hit reverse and go back to the failed, discredited economic policies set that got us into this mess?  Will we rescind and repeal the progress we’ve made to end abuses by insurance companies and big banks, stop rebuilding America’s vital infrastructure, and go back to slashing taxes for millionaires and billionaires with no regard for the fiscal consequences?

From where we stand, the choice is clear.  Vice President Biden ended the conversation by stressing just how high the stakes are, and how important it is that every American citizen stays engaged in this debate in the weeks ahead.  From what I could tell as I looked on from the kitchen, no one disagreed.

Jared Bernstein is Chief Economic Advisor to the Vice President

Tens of thousands of people will lose their jobs within weeks unless Congress extends one of the more effective job-creating programs in the $787 billion stimulus act: a $1 billion New Deal-style program that directly paid the salaries of unemployed people so they could get jobs in government, at nonprofit organizations and at many small businesses.

In rural Perry County, Tenn., the program helped pay for roughly 400 new jobs in the public and private sectors. But in a county of 7,600 people, those jobs had a big impact: they reduced Perry County’s unemployment rate to less than 14 percent this August, from the Depression-like levels of more than 25 percent that it hit last year after its biggest employer, an auto parts factory, moved to Mexico.

If the stimulus program ends on schedule next week, Perry County officials said, an estimated 300 people there will lose their jobs — the equivalent of another factory closing.

The American economy has been growing now for the past four quarters, and private-sector employers have added jobs every month this year.  But the economic hole left by the Great Recession remains very deep, and creating jobs remains the administration’s top priority.

With that in mind, when one of our programs is effectively and efficiently creating hundreds of thousands of jobs for workers who need them, the last thing we should do is shut the program down.

But unless Congress acts quickly, that’s exactly what’s going to happen to the Temporary Assistance for Needy Families (TANF) Subsidized Jobs program.  This program is a proven success – more than 30 states are already using the program to put folks back on the job, and if we let it end prematurely, this highly effective job creation infrastructure that’s been created at the state level will go to waste.

Sadly, Republicans in Congress are playing politics with the future of this program at precisely the time we can least afford to shut it down.

We’ve been talking about what a great program this is for months now, because it’s been extremely effective.  It lets states use Recovery Act dollars to help employers pay for the cost of hiring unemployed workers, and by lowering hiring costs, it encourages employers to hire more workers and create more jobs.  And because many of these workers are being hired at private-sector businesses, the program is not only creating jobs, but also helping American businesses expand and grow.

Unfortunately, the program is scheduled to expire just a few days from now, at the end of September, even though the workers who have been placed through the program still badly need these jobs.  That’s why we’ve been fighting so hard to get this program extended.

The good news is that the program is getting more and more well-deserved attention, like the New York Times article above telling the story of some of the workers and communities that depend on this program and the jobs it’s providing.  And outside of Washington, the program has gotten strong bipartisan support from figures like Haley Barbour, Mississippi’s Republican governor.

But unfortunately, here in the nation’s capital, politics are still triumphing over common sense as Republicans in Congress block action to extend this highly successful job creation program.

Look, I understand there are differences of opinion about the best way to create jobs in this country, but there’s a time and a place for those disagreements.  We should all be able to agree not to shut down programs that are successfully putting workers on the job at private-sector businesses across the country.

So I hope Republicans in Congress will rise above the politics and work with us to extend this program.  We only have a few days left to act.  Let’s keep helping businesses put these folks back on the job.

Jared Bernstein is Chief Economic Advisor to the Vice President

But while we know that recessions always lead to higher poverty rates – and the recession that greeted our administration was no exception – the increase in 2009 was notable in that poverty rose less than expected. What’s more, middle-class incomes held steady, and full-time workers’ median earnings actually went up 2%. The evidence reviewed below points to the Recovery Act as the reason for these outcomes.

Before we examine the new data, let’s back up for a little historical context. While the recession that began in late 2007 was particularly tough on middle- and low-income families, many of these families struggled even as the economy expanded in the 2000s. Yes, the economy grew in those years, but growth was so skewed toward the well-to-do that poverty actually rose, from 11.3% in 2000 to 12.5% in 2007. The incomes of middle class families flat-lined during the last expansion.

As the recession took hold, poverty continued to rise and middle incomes took a further hit. Addressing these immediate income problems, while getting the economy back on track was our first priority as our administration took office at the start of last year. And one major policy mechanism to do this was the Recovery Act.

As President Obama recently pointed out, “…the most important anti-poverty effort is growing the economy and making sure there are enough jobs out there.” Here, the Recovery Act has made a real difference, saving or creating, according to the non-partisan Congressional Budget Office, as many as 3.3 million jobs so far (and two million by the end of 2009). It’s helped to pull the economy back from the abyss, and been instrumental in changing huge negatives—we lost over two million jobs in just the first quarter of last year alone—into positives: we’ve added over three-quarters of a million of private sector jobs this year.  

Clearly, there are not, as the President called for, “enough jobs out there,” and we’re working to build on recent gains with new, targeted jobs policies. Creating good job opportunities is the single best way to help the poor.

Yet the fact remains: especially in a tough job market but even in better times, families often need a safety net to catch them when they fall, or when their incomes aren’t high enough to keep food on the table and a roof over their heads. The data released today, along with earlier research, show the Recovery Act helped here as well.

According to Census Bureau analysis, some of the programs that were particularly helpful to families facing hardship included food assistance, Unemployment Insurance benefits, and Social Security payments for the elderly, whose poverty rates actually fell last year (from 9.7% in 2008 to 8.9% in 2009). 

• The value of food stamps, or SNAP (Supplemental Nutrition Assistance Program), is not counted in the official poverty measure, which excludes non-cash benefits. But if we were to include it, the Census Bureau says we’d find that SNAP lifted 3.6 million people (including 1.7 million kids) out of poverty last year, compared to 1.4 million the year before.
• Unemployment Insurance benefits kept 2.3 million working age people out of poverty in 2009, compared to about 600,000 in the prior year.
• Finally, Social Security really showed its poverty-reduction muscle last year, keeping the incomes of 14 million elderly Americans above the poverty line in 2009.

It should be noted that each one of these programs was significantly expanded by the Recovery Act, which in 2009 put almost $8 billion into higher SNAP payments, over $40 billion into increased Unemployment benefits, and $13 billion into one-time, extra $250 Social Security payments. 

Many other Recovery Act-funded programs helped as well, including $37 billion in Making Work Pay tax cuts for working families, over $12 billion in expansions of the Child Tax Credit and Earned Income Tax Credit for low-wage workers, and investments in child care, affordable housing, and education and training opportunities.

The TANF emergency fund created by the Recovery Act, part of which was designed specifically to help low-income parents find work, has by now helped a quarter of a million people find jobs, often moving from welfare or unemployment into a job.

Arloc Sherman, a policy analyst at the Center on Budget and Policy Priorities, took a close look at the poverty-reducing impact of several Recovery Act investments, most of which are not captured by the official poverty measure.  He found that these investments prevented 6 million Americans from falling into poverty in 2009 -- including 2 million children and half a million seniors -- and reduced the severity of poverty for 33 million more.

Today’s Census data simply put numbers behind what we all know: the Great Recession has meant tough times for most American families—none more so than the most economically vulnerable families at the lower end of the income scale. 

But the analysis also reveals that the Recovery Act has helped mitigate the rise in poverty, providing work and support for millions of Americans in their time of need. The challenge now is to continue to build on the momentum in the private job market, to create the opportunities for families across the income scale to work hard and get ahead.

Jared Bernstein is Chief Economic Advisor to the Vice President

On Meet the Press, the Senator, against a wave of evidence to the contrary, argued that the Recovery Act has been “an absolute disaster” and called for cancelling “a lot” of what’s left in the bill (transcript here). 

His evidence for this claim: “...we’ve lost two-and-a-half million jobs since the stimulus passed.”

Take a look at the figure below and you’ll see why this is so misleading. He’s conflating two periods of very different employment trends. In the first, when his team’s policies dominated, employment hemorrhaged at nightmarish rates. In the second, when the Recovery Act was on the scene, job losses in the private sector began to diminish, and this year, turned positive. 

In fact, over the past eight months, the private sector has added over three-quarters of a million jobs (763,000). And reams of analysis associate this turnaround with the Recovery Act.

To conflate these two obviously different periods, when the difference is in fact a direct contrast between our policies and theirs, is seriously misleading.

But it is standard Republican practice these days. They drove the car in the ditch, stood by the road wagging their fingers while the Recovery Act and other policies got it out, and now, as the car is starting off in the right direction, are saying, “hey, their plans can’t be working because that car used to be in a ditch!”

Let me be clear. The car, as I said, is finally moving in the right direction, but it needs to go a lot faster. Eight years of deep neglect has seriously damaged its engine and it’s not going attain full speed right away.

That’s why President Obama continues to work with anyone who’s willing to help to build on the momentum you see in the chart below. As he put it just last Friday: “...the key point I'm making right now is that the economy is moving in a positive direction, jobs are being created, they're just not being created as fast as they need to given the big hole that we experienced.  And we're going to have to continue to work with Republicans and Democrats to come up with ideas that can further accelerate that job growth.”

Most recently, the President called for a significant downpayment on forward-looking infrastructure program (pdf) (fully paid for) to continue the work on the nation’s roads, rails, and runways begun in the Recovery Act. It’s a critical next step on longer term investments in the nation’s productive capacity that will, in the short term, create good jobs for folks facing particularly high unemployment.

In the interest of getting that car back up to speed as quickly as possible, we urge Senator Graham and his colleagues to work with us on this and other bipartisan ideas.

Jared Bernstein is Chief Economic Advisor to the Vice President

So when economic consensus forms around the outcome of a policy like the Recovery Act, it’s worth taking note. That’s why this article from USA Today, entitled (online) “Economists Agree: Stimulus Created 3 Million Jobs” is worth noting.

The piece cites various analyses from a wide variety of private sector economists as well as from the non-partisan Congressional Budget Office that all reach a similar conclusion: the Recovery Act was a key factor in preventing recession from becoming depression, and along the way, it has created or saved about three million jobs while making historic investments in clean energy, education, and upgrading the nation’s infrastructure (re these longer-term investments, this article from Time magazine reveals another important dimension of how the Act is helping).

There are lots of ways to validate this finding—the article cites the results of a recent study by former Federal Reserve Vice-Chair Alan Blinder and independent economist Mark Zandi, who find that the stimulus:

“…created 2.7 million jobs [so far] and…unemployment would be 11% today if the stimulus hadn’t been passed...”

The article also makes a point about timing that hasn’t been stressed enough. The President signed the Recovery Act on February 19 of last year, less than a month after he got here. Shortly thereafter, loss rates of GDP and job growth began to slow, with GDP turning positive in the third quarter of 2009, and net job growth following shortly thereafter.

Just consider what we view as one of the most important benchmarks of an economy that’s delivering for working families: private sector job growth. Over first seven months of last year, the job market hemorrhaged almost four million private sector jobs. Over those same months this year, the private sector added 630,000 jobs.

That result partly flows from the consumer spending that the Recovery Act helped to support, a point noted in the USAT article:

Stimulus outlays first topped $100 billion in the third quarter of 2009, which is when the economy resumed growing…Likewise, personal consumption spending began to increase in the third quarter after four consecutive quarterly declines.

This important point (remember, 70% of the US economy rests on consumer spending) was underscored in another recent and noteworthy analysis of the Recovery Act by economist Gary Burtless. Check out Figure 2 from his piece, which clearly portrays the impact of the Act on disposable income, leading Burtless to conclude that, “Another tangible sign of a payoff from the ARRA stimulus is the continued strength in consumer spending.”

We know more needs to be done to build on the momentum attributable to the Recovery Act. After all, this terrible recession cost the economy more than 8 million jobs. That’s why we’re continuing to push hard for more help for small businesses, forward looking infrastructure investment, and continued support for the jobs of teachers, police, and firefighters.

But amidst a lot of politically motivated noise intended to fog the issues, it’s important to appreciate the building consensus that the Recovery Act has done what it was intended to do: helped to stabilize the economy and save jobs. 

And that’s true both on one hand AND the other.

Jared Bernstein is Chief Economic Advisor to the Vice President

But yesterday, when Representative Boehner declared that “all this ‘stimulus’ spending has gotten us nowhere” on the same day the nonpartisan CBO said the program has created or saved as many as 3.3 million jobs nationwide and his own home state’s Department of Transportation said nearly 9,500 construction workers were on the job in July just on Ohio Recovery Act transportation projects alone… well, let’s just say that dance got a little more… awkward.   

Now, Representative Boehner was one of the first to declare the Recovery Act dead on arrival - the day it was signed into law, he declared it would “do little to create jobs.”  But as soon as June 2009, as funding for Recovery Act transportation projects began to flow into Ohio, he said those dollars would be used for – get this – “shovel-ready projects that will create much-needed jobs.”  [Boehner.House.gov, 6/15/09]
 
And then when the nonpartisan CBO, Congress’s top watchdog and an institution widely respected on both sides of the aisle, began weighing in on the job impact of the Recovery Act, the dance got a little more complicated.   Check out these quotes from Rep Boehner, followed by the facts:
 
AUGUST 2009: Maintains that stimulus hasn’t created any jobs:  “You know, after the $1 trillion dollars stimulus bill that didn’t create any jobs.”  [Hugh Hewitt Show, 8/29/09]

• NOVEMBER 2009: The nonpartisan CBO announces the Recovery Act created or saved as many as 1.6 million jobs through September 2009.  [CBO Report, 11/30/09]

JANUARY 2010: Says the stimulus “clearly hasn’t worked”: “Their trillion-dollar stimulus plan from a year ago clearly has not worked.”  [NPR, 1/27/10]

• FEBRUARY 2010: The nonpartisan CBO announces the Recovery Act has created or saved as many as 2.1 million jobs nationwide through December 2009.  [CBO Report, 2/23/10]

MAY 2010: Still asking where the jobs are: “Where are the jobs?” [Boehner Statement, 5/7/10

• MAY 2010: The nonpartisan CBO says the Recovery Act created or saved as many as 2.8 million jobs through March 2010.  [CBO Report, 5/25/10]

And then, of course, yesterday was the most difficult dance step of all: on the very same day that he declares in a major speech that the Recovery Act has “gotten us nowhere,” first,the nonpartisan CBO announces the Recovery Act has created as many as 3.3 million jobs nationwide and lowered the unemployment rate by as much as 1.8 percent through March of this year [CBO Report, 8/24/10], and then the Ohio Department of Transportation announces that nearly 9,500 construction workers were on the job on Ohio Recovery Act transportation projects in July, the highest monthly total since it began.  [Columbus Dispatch, 8/24/10]
 
I suspect those nearly 9,500 Ohio construction workers and 3.3 million Americans at work thanks to the Recovery act would disagree with Rep. Boehner’s statement that the Recovery Act has “gotten us nowhere.”
 
And then to make his dance even more complicated, leading economist Mark Zandi said today that the Congressman from Ohio was “just wrong” that the Recovery Act has “gotten us nowhere:”

Asked about Rep. Boehner’s claim that “all of this ‘stimulus’ spending has gotten us nowhere,” Mark Zandi, chief economist of Moody’s Analytics said “that is just wrong, the stimulus has been very helpful.”  [Monitor Breakfast, 8/25/10]

And let’s keep in mind who we are talking about here.  This is the same Republican leader that actually said he wanted all of those people to lose their jobs earlier this month when he called for stopping the Recovery Act – a claim that got him in some hot water with independent fact-checkers who rated his rhetoric flat-out false.
 
The true facts of the case are that this economy has undergone a major turnaround from the very deep recession that greeted President Obama when he took office, and the Recovery Act has been a major factor in that reversal.  Yes, we’ve still got a long way to go, but we’re moving in the right direction.
 
While it’s bad enough that Rep Boehner refuses to accept these facts, what’s worse is that he and his Republican colleagues have only one solution: a return to the same Bush economic policies that got us into this mess.   As the head of their campaign committee, Rep. Pete Sessions, said, if they take control of Congress, they will go back to “the exact same agenda” they were pushing before President Obama took office.
 
Mr. Boehner and his colleagues may well be the only Americans nostalgic for the economic policies of the Bush era.   But we can’t go backwards.  We need to recognize the positive impact of the Recovery Act and build on the momentum we’ve established.

Jared Bernstein is Deputy Assistant to the President on Economic Policy

That is, much of the attention to how this critical sector is faring focuses on the end-of-the-line assembly plants, and less on the suppliers that provide the parts to be assembled. 

You might think that’s because in employment terms, the end-of-the-line is most important.  But in fact, for every worker in the assembly plant, there are three workers in the supply chain. 

So if you want to assess the health of the auto industry, you’ve got to look beyond the factories that build the cars and trucks and examine how the suppliers are doing.

With that in mind, Vice President Biden traveled to Toledo, Ohio, today to hold a Middle Class Task Force event at the Chrysler Toledo Assembly Complex.  This state-of-the-art complex houses the main assembly plant producing the Jeep Wrangler, surrounded by three of the plant’s suppliers. 

It’s one impressive complex and a great example of how the industry in general, and Chrysler in particular, is emerging from its dark days leaner, stronger, and with new-found efficiencies.  In fact, this facility twice received the Harbour Award as the most efficient assembly plant in North America.

They achieve these efficiencies by locating their major suppliers right next door, providing direct and uninterrupted flows from their assembly lines right into the plant. Such intimate flow control means much less down time—simply put, workers at the Wrangler plant don’t spend time waiting for parts.

The Vice President’s remarks emphasized these and other aspects of the supply chain.  To help make the point, he displayed this visual, showing the suppliers which provide parts directly to the Wrangler assembly plant. These top-tier suppliers alone represent 3,000 American jobs.  Other suppliers, one link down the chain, create additional jobs across the country supplying parts to the top-tier folks.

So when a plant like the one we visited runs two shifts, as is currently the case, that doesn’t just mean jobs in Toledo.  It means jobs all along the supply chain, in places like Grand Rapids, Michigan; Dry Ridge, Kentucky; Greensburg, Indiana; and other communities all over the country.

As I watched the Vice President meet with workers at this great manufacturing plant in the heart of the heartland, I couldn’t help but flash back to the early days of our auto task force.  Back then, it was by no means certain that these men and women would be able to keep their jobs making cars.

But even while some in government and from the pundit class urged the President and Vice President walk away from this industry, they wouldn’t turn their backs.  Instead, they bet on the American worker, on the uniquely American spirit of renewal, and on the faith that the key stakeholders would do what was needed to once again make this industry a global contender.

And that bet is paying off.

In the year before we took office, the auto industry shed 431,300 jobs. But in the 13 months since GM and Chrysler emerged from bankruptcy, auto industry employment has increased by 76,300, a huge reversal—one we’d never have seen had we listened to those urging us to walk away.

Of those 76,300 new jobs, close to 40,000 come from the suppliers. That’s the fastest year over year growth that they’ve seen in a decade.

They’re good manufacturing jobs, right here in America, staffed by highly productive men and women doing two important things: they’re building great new vehicles, and they’re writing a new chapter in the history of the American auto industry.

It’s a story of hard work and sacrifice by the companies, the workers, the unions, investors, and others over the last year.  It’s a story of a bold new President and Vice President standing by a core American industry in its time of need, carefully structuring a temporary intervention designed to get them back of their feet.
And it’s a story that is by no means over.  The industry, much like the overall economy, is moving solidly in the right direction, but it’s still got a ways to go. 

Vice President Biden and the Middle Class Task Force were happy to be a part of the story today, and we’ll continue to watch it and tell you about it as it evolves.

Jared Bernstein is Chief Economic Advisor to the Vice President
 

In response, the Congressman was quoted as saying that our administration owed his constituents “…an explanation of how raising taxes on small businesses will do anything but further hinder job creation in Ohio and across the country.” 

Again, Congressman Boehner is confused.  So we thought we’d take him up on the invitation to explain to the people of Ohio who has been fighting for small businesses here in Washington and who’s been obstructing that fight.

President Obama has consistently worked with anyone who would join him to help small businesses lead this economy back to health.  But in virtually every case, House Republicans led by Rep. Boehner have opposed our attempts, while Republican Leaders in the Senate have used procedural gimmicks to keep them from even coming up for a vote.

Most recently, and most egregiously, House Republicans voted against the Small Business Jobs and Credit Act of 2010 (the Democratic majority passed the bill, only to have the vote blocked by Senate Republicans).  This bipartisan bill would have reduced taxes on small business by zeroing out capital gains taxes on their investments, “bonus” depreciation, and immediate expensing of equipment purchases (all three of these significantly lower their investment costs). The bill would also create a fund for small, community banks to lend to small businesses.

So here’s a bill that helps small businesses and small banks, strongly supported by the White House (and, for that matter, small business advocacy groups like the Chamber and NFIB), yet Rep. Boehner’s team opposed it.

Unfortunately, that’s not a new position for them.  They tried to block the HIRE Act (a tax cut for businesses that hire the long-term unemployed), Recovery Act loan guarantees and fee forgiveness supporting around $30 billion of small business lending, and let’s not forget their opposition to a $40 billion tax credit for small businesses that provide health care to their workers.

What, then, was Rep. Boehner talking about in that quote?  He and his team want to extend the Bush tax cuts for the wealthiest households, and they’re trying to do so under the guise of helping small business. 

Again, the facts of the case point exactly the other way.  Virtually every small business would benefit from President Obama’s plan to preserve the tax cuts for families with incomes below $250,000.  Only three percent of filers report small business income above that level, and they’re mostly high-end professionals like someone with a small legal practice—perfectly worthy business folks, of course, but not the small entrepreneurs we’re trying to reach with the plans the Republicans continue to block.

Check out this graphic to see for yourself who benefits from the tax cut Rep. Boehner is advocating.  Compared to what the President wants to do, it delivers less to the middle class, and, at the expense of adding billions to the deficit, massively delivers to millionaires.

So, collecting his positions over the past couple of days, Rep. Boehner wants to: a) end the Recovery Act that has put more than 100,000 Ohioans to work, b) add $37 billion to the deficit by cutting taxes of the wealthiest households, and c) block tax cuts and new lines of credit to middle-class, small businesses.

It all sounds kind of familiar, doesn’t it?  That’s because it’s precisely the policy prescription that got us into this mess.  And it’s the last place we want to go back to.

Jared Bernstein is Chief Economic Advisor to the Vice President

We were awfully surprised to hear Rep. Boehner come out for killing jobs en masse in his own state and district by stopping the Recovery Act on last Sunday’s news shows. 

Though we’re sure he didn’t know it, the Congressman is advocating to kill the expansion of the Butler County Community Health Center and bring some of the twenty-five highway projects across the district to a grinding halt.  Across the state of Ohio, he said that approximately 4 million working families should get an unexpected cut in their paycheck as the Making Work Pay tax credit disappears, unemployed workers should go without unemployment benefits, and major Ohio road projects like the US-33 Nelsonville Bypass project and the Cleveland Innerbelt Modernization project should be stalled or stopped.  Oh, and some of the more than 100 clean energy Recovery projects employing workers across the state should be shut down.

That would be the direct consequence of his suggestion that we shut down the Recovery Act: “There's still about $400 billion or $500 billion of the stimulus plan that has not been spent. Why don't we stop it?”  Now if you have been following this blog, you know that the notion there is “$400 billion or $500 billion” in Recovery Act funding unspent couldn’t be further from the truth.  In fact, we’re right on track to hit the goal set when the Recovery Act passed: that 70% of the $787 billion in funds would be “outlaid” or provided in tax benefits by September 30, 2010. But you don’t have to take our word for it – independent fact-checker Politifact.com recently rated Rep. Boehner’s claim flat-out false.  As they noted:

[R]ight off the bat, Boehner's $400 billion to $500 billion figure is much too high.

But then they go on to say:

[W]e think it's misleading to refer to even that lower number as "unspent" stimulus, because much of the $292 billion has been obligated, even though it has not been paid out.

But here is where things get interesting.  We discussed a couple of weeks ago that Recovery Act dollars are put to work creating jobs and jump-starting projects long before they cross this final step of being “outlaid.”  First of all, two-thirds of the Recovery Act is tax cuts and relief payments which were largely designed to spend out gradually over time, generally over a two year period.  So that “unspent” money is things like the tax cuts owed to working families in their paychecks and the upcoming unemployment checks owed to those hit by a job loss. 

The other one-third of the Recovery Act is projects where the money largely isn’t paid out until work is underway or nearing completion.  If you were renovating your house, you wouldn’t pay for the whole thing up front – you would make progress payments as the key targets are being met and work is being completed.  And you would expect the government to do the same thing with your taxpayer dollars, right?  But an awful lot happens with the commitment of those dollars before anyone gets paid.  If the bank pre-approved you for a loan for your renovation, you would certainly start drafting up plans, lining up contractors and securing permits.  And then once the bank deposited that money in your account – just like when the government contracts with a Recovery Act awardee to give them a grant or loan – you would start hiring a contractor who would hire workers, buy materials and start the project.  Well, the same is true of Recovery Act projects – that “unspent” Recovery Act project money has already started tens of thousands of projects nationwide.

Big picture that means that 94 percent of the Recovery Act is either in tax cuts, payments, or projects under contract.  Of the remaining 6 percent, half has been awarded and contracts are being finalized - and half is in the final stages of the award process.  So when critics like Rep. Boehner talk about stopping the spending, they’re essentially talking about taking away middle class tax cuts, leaving unemployed workers unexpectedly high and dry without an unemployment check, halting road and bridge projects and leaving them unfinished, leaving contractors unpaid for the work they’ve already done and more.

So when it comes right down to, is Rep. Boehner really ready to tell Ohioans they’d be better off if we stopped the Recovery Act?

Jared Bernstein is Chief Economic Advisor to the Vice President

An article in USA Today mistakenly concludes that Recovery Act benefits are not reaching the communities that need the help.  Now you might reasonably ask whether the 3 million or so people working because of the Recovery Act live in places where they don’t need those jobs – kind of an absurd proposition.  And it’s also the case that USA Today reaches this conclusion using some incomplete data to begin with - but the article also makes two mistakes: First, USA Today fails to separate out programs directly keyed to joblessness, and second, they conflate state unemployment with need. 

Before going into the details, it’s important to reflect on this second shortcoming, because it’s a fundamental flaw in their analysis.  We put recovery projects where they’re needed, regardless of a state’s unemployment rate.  We build roads where roads are needed, we clean up superfund sites where they are located and we repair schools where schools need fixing.  

To put this point in historical context, think back to the New Deal.   One of the most memorable and lasting projects from that era was the Hoover dam.  This project was built in a region where the unemployment rate was probably around zero, because it was in the middle of the uninhabited Nevada desert!  But using USA Today’s analysis, the Hoover dam would have been a mistake because it was built in an area with only “below-average” unemployment.

Delving into some details, the article claims that per capita spending is more likely to go to communities where the state unemployment rate is below the national average.   But, as we’ve argued before, if you look at the Recovery Act programs that are targeted toward reaching the unemployed—not just Unemployment Insurance, but food assistance, training services, aid to states, and more—it’s simply not true that state Recovery spending is uncorrelated with state unemployment. 

The graph below plots this relationship, showing that when we look at the set of programs directly linked to joblessness (using complete, up-to-date data), the positive correlation is clear and strong.

The correlation is generated by obvious factors.  Some programs, like unemployment insurance benefits, are linked directly to unemployment.  Other programs, like aid to states to help offset the costs of their Medicaid programs, also give weight to state unemployment rates, so there too, we expect a significant correlation.

So, contrary to the thrust of the USA Today piece, much of the Recovery Act spending is higher in places with higher unemployment, and that’s no accident: it reflects the Act’s design.  But that’s not the whole story.

As noted above, the fact that the correlation between state unemployment and total ARRA spending isn’t perfect is an important and positive attribute of the Recovery Act. 

There are a lot of Americans who both need help and live in states with below-average unemployment.  In fact, there are incredibly hard-hit communities in low-unemployment states and communities doing better than average in higher-unemployment states.  For example, there are communities in North Dakota with high double digit unemployment (where the state unemployment rate was 3.6% in June) and communities in Florida doing better than the rest of the country (where the state unemployment rate was 11.4%). 

And there are highly worthy projects—roads that really need fixing, water systems that need repairs, schools that need resources—in every state across America.   It’s smart economics to fix these problems where they exist, regardless of the unemployment rate.

Bottom line, where Recovery Act components are directly keyed to job market conditions, they are clearly reaching those areas (keeping in mind that some of those communities may reside within low-unemployment states).   And where there are infrastructure and investment needs—whatever the unemployment rate is—the Recovery Act is there too, helping to upgrade our schools, our highways, our airports, while planting seeds of opportunity in sectors like clean energy, high-speed rail, and the smart grid.

Most importantly, the Recovery Act is putting Americans back to work, approximately three million people so far.  And that’s not just our view.  Outside analysts from the non-partisan Congressional Budget Office to independent economists, Mark Zandi and Alan Blinder, whose recent work concludes that the Recovery Act played a key role in turning this economy around. 

Remember, in the first quarter of last year, when President Obama signed the Recovery Act, over two million private sector jobs were lost.   Now, in the first six months of this year, we’ve added just under 600,000 private sector jobs.

That’ s movement in the right direction, but it’s not fast enough.   We’ve got to do more to build on the momentum the Recovery Act helped to generate.  But along the way, let’s be sure to get the facts right about how the Recovery Act is working and who it’s reaching.

Jared Bernstein is Chief Economic Advisor to the Vice President

That’s why Vice President Biden held a Middle Class Task Force meeting on Thursday to talk about stronger consumer protection to protect American households from deceptive practices.   The VP was joined by Jon Leibowitz, Chairman of the Federal Trade Commission, who came to our Task Force meeting to announce new rules that will protect consumers of debt relief services.

These debt relief companies promise to get consumers out of debt, but too often it turns out that they collect excessive fees even as they fail to deliver on their too-good-to-be-true promises, leaving struggling Americans in even worse shape than before. Among other protections, the new rules Chairman Leibowitz announced last week will ban advance fees, ensuring that debt relief companies actually deliver on their promises by reducing a consumer’s debt before they can collect payment.

This new FTC rule is a perfect example of the kind of simple, common-sense changes we need to protect American consumers and strengthen the middle class. That’s why the Middle Class Task Force enthusiastically supports the work that’s being done by the FTC and other independent agencies to strengthen consumer protection during these tough economic times.

Jared Bernstein is Chief Economic Advisor to the Vice President

Let’s start with the bigger picture. Just last week two prominent, independent economists released a rigorous study on how actions by the government (and the Federal Reserve), including the Recovery Act, helped to end the Great Recession. One of the authors—Mark Zandi—was one of McCain’s top advisers during his presidential bid. He and Alan Blinder (a former vice-chairman of the Federal Reserve) found that the Recovery Act has created or saved about 2.7 million jobs so far, and shaved about a point and a half off of the unemployment rate.

These jobs are the result of over 70,000 projects in action around the country, of grants to states supporting jobs of teachers, police, and firefighters, of tax cuts for working households, loans to small businesses, and investments in innovative new industries producing advanced batteries, clean energy, and much more. They’ve helped reverse a situation where last year, we were losing millions of private sector jobs; in the first half of this year, we’ve added 593,000 private sector jobs.

Now, we’re always glad to take a second look at projects when concerns are raised. In fact, there’s never been a stimulus program of this magnitude with anywhere near the amount of oversight that’s been brought to bear on the Recovery Act. And when we find a problem, we fix it. We’ve shut down hundreds of projects that weren’t delivering the goods.

But the inaccuracy of McCain/Coburn in this regard renders this report just as unreliable as the last two. We followed up the projects in those reports, and found half of their claims to be flat-out false or misleading. Many of the others criticized worthwhile, job-creating projects.  Check out this link and you’ll see that news outlets like CNN have debunked their claims in the past, often by simply going to the folks who were working on the project and learning about it:

In the current report, our review so far finds that five of the 100 projects are not even Recovery Act projects. And others are just blatantly wrong on the facts. Take for example an award that McCain and Coburn describe as “funding a WNBA Practice Facility,” when in fact the award is building a tribal government center that will create education and health facilities while also creating hundreds of jobs. Moreover, the tribe has agreed to disallow any commercial use of the facility. 

One of their top critiques in the new report is a clean energy program in California that’s put about 50 people to work so far, expects to create 1,500 construction jobs, and then 500 permanent green jobs after that. Gov. Schwarzenegger praised the program, as did the Chamber of Commerce. What would McCain and Coburn say to these workers? That they shouldn’t have this opportunity? That they should go back to the jobless roles? That building a clean energy future is the wrong way to go?

What ideas does Senator Coburn have to offer to the 35,000 people working in Oklahoma who wouldn’t be there without the Recovery Act?  What about the 64,000 Arizonans at work because of the Act? 

Instead of answers, we’re left with a partisan attack contradicted by one of the author’s own former advisers. But that’s not all. We’re also left with a choice.

The President has shown he is willing to work with anyone who will join us to figure out new ways to create more jobs. The Vice-President spends each week making sure we’re squeezing job out of every Recovery Act dollar.   Meanwhile, Republicans are blocking an up or down vote on a package of bipartisan proposals that would cut taxes for small businesses and allow them access to capital through community banks. It’s incredible, when you think about it: last week as they were working to turn out this hit-job of a report, these same two senators were voting against helping small businesses expand and create jobs.

Yes, we must carefully evaluate our progress, but we must do so without partisan thumbs on the scale. In that regard, the report these two senators are touting today is not a road map forward. To the contrary, it is one back to the failed policies that got us into this mess. We’ve tried that route. We cannot afford to go back there again.

Jared Bernstein is Chief Economic Advisor to the Vice President

It’s all taking place in Indianapolis, Indiana, where Allison Transmission is building a new factory to make hybrid systems that go into energy efficient trucks, buses and other commercial vehicles.   The new plant, and the 100 folks Allison expects to put to work in it, was partially financed by a $62.8 million Recovery Act grant from the Department of Energy as part their advanced battery grant program.

There’s a lot to like about this project.  Once the new plant is fully operational, it will crank out more than 20,000 hybrid propulsion systems each year.   If you’re like me, your reaction to that is a) wow!...and b) um, what’s a hybrid propulsion system?

Laurie Tuttle, Allison’s VP of Hybrid Programs, was kind enough to explain it to me.  As I understand it, these are systems that take energy that a vehicle generates that would be otherwise wasted, and reuses that energy.   For example, when a vehicle slows down, conventional breaks create friction and heat.  “Regenerative breaking” recovers that energy and stores it in the battery for later use in acceleration or, on commercial vehicles, for other purposes like powering a boom on a utility truck.

That saves gas, so fuel efficiency in these hybrids are typically goosed by 25-30 percent.

Allison’s long-range plan was to start developing these new systems over the next few years.  But the Recovery Act grant, matched by about $68 million of capital from their private investors, enabled them to accelerate the production, creating jobs now when they’re most needed, and giving our industry the head start it needs to be globally competitive in the production of clean energy transportation. 

Ms. Tuttle tends to be pretty technical in discussing this stuff, but she got downright emotional when she described the positive impact this new investment is having on their community, telling me, “Goodness, to be able to bring these jobs right here to our heartland…it just feels great.”

You don’t see a lot of people getting all choked up about building systems that capture and recycle kinetic energy.  But I think those of us who are rooting for new jobs in American manufacturing, lasting opportunities for middle-class workers, and energy efficiency are right with her on this one.
 
Jared Bernstein is Deputy Assistant to the President on Economic Policy

This rule should especially be observed when the assertion that it’s working is widely agreed upon by both Democrats to Republicans, by economists and business owners and governors.

But unless the Senate acts soon to preserve the Temporary Assistance for Needy Families (TANF) Subsidized Jobs program, this simple rule will be broken and this great program will be taken down.

We’ve highlighted this jobs program before, and a quick look at the reasons it’s so effective explains our enthusiasm.  It lets states use Recovery Act dollars to pay for part of a new employee’s wages, giving employers a strong incentive to hire unemployed workers.  And we’re not talking about bureaucrats here, folks – these subsidized workers are being placed at private-sector businesses and non-profits in addition to state government agencies.

It’s a two-fer as well, because while the program helps folks get out of their homes and into jobs, it’s also helping them get off public assistance like unemployment insurance and welfare.

So it’s no surprise that everyone from this administration to Mississippi’s Republican governor, Haley Barbour, wants to see the program extended.

Importantly, it’s not just government officials who recognize the importance of subsidized jobs right now.   Back in May, we heard first-hand how this program is helping small businesses to take advantage of new opportunities while making a difference in the lives of workers.  With many businesses still struggling, these subsidies for new employees can make the crucial difference between small business owners hunkering down or deciding to expand their businesses and create new jobs.

The latest research shows that the subsidized jobs initiatives running in 35 states so far will have helped to put nearly 200,000 workers into new jobs by September.  The Illinois program, which just started a few months ago, has already placed 14,000 workers; the program has ramped up so fast that they’re now placing 500 workers every day. 

Let me assure you, as someone who has spent decades studying job creation programs, to reach these kinds of numbers this quickly is nothing short of remarkable.  It shows that, like our Cash for Clunkers program of a few months back, the subsidized jobs program has hit a policy sweet spot in the current economy, something that’s all too rare in this policy space. 

But unless Congress acts to extend the program, that’ll be it; the program will expire on September 30^th, and states will eliminate these successful jobs programs that are already up and running (btw, the extension currently on the legislative table is paid for, meaning it doesn’t add to the deficit).

Moreover, the looming expiration will prevent states from setting up and expanding programs.  Over the last year, more and more states have established subsidized jobs programs, and that progress will end well before the program’s scheduled September expiration as states avoid getting involved in a program they know will end.

Fortunately, this success story is starting to get some more attention.  I only hope, for the sake of the million of job seekers out there trying to do the right thing, trying to get off the couch, off the unemployment rolls, and into the job market, that their efforts won’t be ignored by policy makers who now control the fate of this extension.  

It’s working great, and we need the work.  So let’s keep it going.

Jared Bernstein is Chief Economic Advisor to the Vice President

Leading independent economists, the nation’s governors and the millions of Americans on the job thanks to the Recovery Act all say it’s helped rescue the economy, so it’s ironic that the very critics who refuse to acknowledge it’s working are those whose economic policies led us into this crisis in the first place.  Republicans in Congress may have made a cynical bet to deem the Recovery Act a failure before it even began, but even they can’t ignore the facts: after years of failed policies, the Recovery Act has helped us go from losing over three million private sector jobs in the first five months of last year to adding 495,000 in the first five months of this year, and from an economy shrinking by six percent to an economy growing three percent.

Among the biggest errors in Representative Boehner’s report are:

“[T]he ‘stimulus’ isn’t working as promised.”

• In fact, the nonpartisan Congressional Budget Office says the Recovery Act is already responsible for as many as 2.8 million jobs and on track for about 3.5 million by the end of the year – exactly the projected target at the time the Recovery Act was signed.  [CBO Report, May 2010]

“Despite massive amounts of deficit-fueled ‘stimulus’ spending, the construction sector…has continued to reel from the recession.”

• While the construction industry has certainly been hard-hit by eight years of failed economic policy, it’s beginning to recover in-part due to the Recovery Act.  In the last month of the previous Administration, the construction industry lost 153,000 jobs [BLS, January 2009].  President Obama signed the Recovery Act into law a month later and the construction industry has now gained jobs two of the last three months.  And Recovery Act infrastructure projects are still ramping up – this summer will be the most active season for them yet.

“Washington Democrats have spent the last 18 months racking up record deficits and debt, spending money with reckless abandon while claiming that their programs will create jobs for the millions of Americans who are unemployed or underemployed.”

• The previous Administration left behind a legacy of a projected $1.3 trillion dollar deficit which today is more than 90 percent of the federal deficit.
• Because of its targeted, temporary nature, the Recovery Act will add less than half a percent to the deficit-to-GDP ratio by 2012 and nothing to the growth of the debt-to-GDP ratio over the rest of the decade.
• Both public and private economists say that the Recovery Act is already responsible for more than 2.5 million jobs.  According to IHS Global Insight chief economist Nariman Behravesh, “Without the stimulus, 3 million more Americans would be out of work and the national unemployment rate, just below 10 percent, would be 12 percent - or higher [The Boston Globe, 3/7/2010] and Stuart Hoffman, chief economist at PNC Bank agrees, saying, "The stimulus worked. Without it, the unemployment rate would probably be closer to 11 percent and the economy might not have grown at all last year. [ABC News, 2/18/10]

It’s clear that the Recovery Act is working:

1. In the first quarter of 2009, the economy lost 750,000 a month on average—over 2 million jobs lost in one quarter; in six of the past seven months, net job growth was positive, including 495,000 private sector jobs in the past five months alone.. 
2. When President Obama took office, GDP was plummeting at an annual rate of -6.4%.  But now GDP has grown three straight quarters at an average rate of 3.5%.
3. In the first five months of 2009, the economy lost over 900,000 manufacturing jobs
    

Jared Bernstein is Chief Economic Advisor to the Vice President

That’s why we’ve proposed to address a growing problem in our labor market: the misclassification of employees as independent contractors (ICs).   Deputy Secretary of Labor Seth Harris testified to Congress on this issue today, and the opening of his testimony is worth repeating here:

"Misclassification" seems to suggest a technical violation or a paperwork error.  But “worker misclassification” actually describes workers being illegally deprived of labor and employment law protections, as well as public benefits programs like unemployment insurance and workers’ compensation because such programs generally apply only to “employees” rather than workers in general…Misclassification is no mere technical violation.  It is a serious threat to workers and the fair application of the laws Congress has enacted to assure workers have good, safe jobs.

While unintentional misclassification occurs, that’s not the real problem.  Some workers really are independent contractors, and sometimes employers mistakenly classify some of their employees as ICs.  But some less scrupulous employers have been intentionally and systematically misclassifying their workers, and it’s these cases that need to be met with new rules to address what experts say is an increasing problem.  And those new rules are precisely what we at the Middle Class Task Force have proposed.

You may be wondering why an employer would misclassify their workers.  The answer is simple: they can pay them considerably less, since ICs are not subject to minimum wage or overtime rules.  And since employers don’t have to pay the requisite employment taxes on ICs, like payroll or unemployment insurance taxes, they end up shortchanging government coffers as well.

A moment’s thought also shows how misclassification creates and uneven playing field: employers who systematically misclassify their workers have a significant competitive advantage over the vast majority of employers who are playing by the rules.  And if the folks breaking the rules can do the job more cheaply than the folks following the rules, it’s going to be tougher and tougher for the good guys to hang on.

President Obama’s FY2011 Budget features a plan to address the problem.  First, we need to get rid of some of the old policies that incentivize misclassification, then we need to make it easier for both the Labor and Treasury Departments to find misclassifiers, get them to accurately classify their workers in the future, and penalize them if they fail to do so.  Finally, we must restore workplace protections to workers who have been wrongly classified.

And there’s another good reason to pursue these changes today: in these times of high deficits, we need the revenue.  Remember, when employers misclassify employees as ICs, they don’t pay the taxes they owe.  Implementing the changes we’ve proposed will bring in $7 billion over ten years.

So keep an eye on this issue as we work with Congress to not only create more jobs, but to create better ones.

Jared Bernstein is Chief Economic Advisor to the Vice President

Particularly in regard to the Recovery Act, Brooks gets the facts wrong and in so doing, presents a misleading picture of where we’ve been, where we are, and what the best next steps should be.

Jobs Saved or Created: Brooks cites a model that “suggests the stimulus will create about a half-million jobs.”  That’s demonstrably wrong based on Recovery Act recipients’ own reports, and way off the consensus of outside estimates.  Each of these facts is, btw, a mouse click away.

For example, click here and learn that according the Congressional Budget Office, the nation’s premiere, independent, nonpartisan scorekeeper, as of the first quarter of this year, the Recovery Act saved or created as many as 2.8 million jobs. 

The CBO evaluates the jobs created by the full scope Recovery Act programs, from direct spending on road projects, to teacher-job preservation, to tax cuts, and so on.  But there’s another source worth examining here: recipient reporting on Recovery.gov.  Click on the link and you will see the number 681,825.  These are the number of jobs reported by a subset of Recovery Act recipients, those whose jobs came through direct spending (missing, for example, jobs created by tax cuts or jobs created indirectly through spending by direct beneficiaries). 

Note two things about this number: first, it reflects jobs created or retained with less than a fifth of the Act’s spending, and second, even though it only covers a small part of Recovery Act spending, it’s a lot higher than “half-a-million.”

Brooks may have objections to these facts, but it is misleading in the extreme to simply omit them.

Brooks then incorrectly cites the work of economist Ed Glaeser to suggest that there’s no relationship between stimulus spending and job creation.  Glaeser finds nothing of the sort—the raw relationship Glaeser reports is that unemployment has risen less where the stimulus was larger (see here for a discussion of Ed’s work).  I spoke to Ed this morning and he certainly believes the stimulus created jobs in states across the country.

Current Conditions:  The other lynchpin of Brook’s argument is the fact that in the last jobs report, of the 431,000 net jobs created in May, only 41,000 were private sector jobs.  In March and April, however, the number of private sector jobs created were 158,000 and 218,000, respectively.   Every economist who follows these numbers knows they bounce around, so cherry-picking one month to make your case is just bad analysis (see here for a gaggle of economists making this important point).  Presumably, Brooks wouldn’t have made this point last month, and it’s implausible that the stimulus worked in April but not in May.

The average of private sector job growth over the past three months has been about 140,000 per month.  One year ago, that same average was negative 575,000…per month!   Over the past three months, we’ve gained over 400,000 private sector jobs.  Over that same period last year, we lost 1.7 million.

Economists across the spectrum widely agree that the Recovery Act played a key role in that reversal.  Mark Zandi, one of the most frequently cited economists in America (and an economist who previously advised the McCain campaign), called the Recovery Act “the catalyst for the transition from recession to recovery.”

We know we have a long way to go before working Americans once again have the economic opportunities they need and deserve, and the President is working aggressively to build off of the momentum described above.  But we can’t effectively plan next steps if we fail to objectively and factually evaluate where we’ve been.

Jared Bernstein is Chief Economic Advisor to the Vice President

Because the outcome of this debate—the policies that ultimately come out of it—are of great importance to the economic lives of middle-class families.

Speaking at the University of Milwaukee-Wisconsin’s Sheldon B. Lubar School of Business, the Vice President stressed two reasons why this matters so much.  First, the meltdown might have emanated from Wall Street, but it reached Main Street with a vengeance.   The Great Recession was born of a housing bubble inflated by negligent oversight, the absence of transparency in key financial markets,   and a reckless pursuit of risk that brought this economy to the brink of depression.  The result is all too well known: millions of jobs lost, housing values and retirement savings decimated, small businesses shuttered, and an already-pinched middle class squeezed even harder.

Second, and this may be a little hard to believe right now, the VP reminded us that the stock market exists for a good reason.  When it’s working properly, it directs capital to the most productive investments in order to make something real and useful for society’s benefit, creating good, middle-class jobs along the way.

Historically, at least when it wasn’t beset by reckless speculation, the financial system played a key role in our economy, doing everything from financing the next great industry, to helping firms borrow money for investments in factories, to providing the overnight lending needed to stock shelves in the mall.

In fact, this system is so important that you can’t have a healthy economy without it.  But regulators, lulled by fairy tales of self-correcting markets, fell asleep at the switch, and Wall Street went from playing a productive role in our economy by distributing capital to useful investments to playing an actively destructive role by diverting that capital into their own private casinos.

There’s no way the middle class can get their fair share of the growth when that’s happening.

Vice President Joe Biden and Treasury Secretary Tim Geithner answer questions from the audience after delivering remarks on Wall Street Reform during a Middle Class Task Force event at the University of Wisconsin-Milwaukee student union, in Milwaukee, Wisconsin, April 27, 2010. (Official White House Photo by David Lienemann)

After they spoke, Vice President Biden and Secretary Geithner opened up a discussion with the public, taking questions from the audience about Wall Street reform.   We got some great questions, which gave the Vice President and the Secretary a perfect opportunity to explain why we’ve proposed the reforms that we have, and how those reforms will prevent another painful financial crisis like the one we just experienced.

We’ve just learned that the Senate has allowed debate to begin debate on this critical legislation.  Our nation now has a historic opportunity to reform this central aspect of our economy.   In the name of the great American middle class, it is an opportunity we must not squander.

Jared Bernstein is Chief Economic Advisor to the Vice President

Today’s Recovery Act in Action episode takes place in Durham, NC at Cree, Inc., America’s foremost producer of LED lighting.  It’s a tale of many important economic advances coming together: cutting- edge energy-saving technology, export-led growth, and most importantly, good manufacturing jobs here in the US.   And at the center of the story is a Recovery Act tax credit that helped to pull a lot of this together.

Cree was chosen for a $39 million tax credit through this Recovery Act program, which is called the Advanced Energy Manufacturing Tax Credit, nicknamed 48C for its line in the tax code.   So far, the investments they’re using the credit to make, along with the private capital they’re putting into those investments, have led to 375 new factory jobs in the last year, and they’re planning to add 300 more next year.  

Vice President Joe Biden and Secretary of Energy Steven Chu tour Cree, with Cree CEO Charles Swoboda, Durham, North Carolina. March 18, 2010. (Official White House Photo by David Lienemann)

The 48C credit has a unique characteristic that makes it especially important in today’s economic landscape.  For years, we’ve used the tax code to subsidize the generation and use of clean, renewable energy.  That’s a good thing, and wholly consistent with President Obama’s environmental vision.

But another part of that vision calls for the growth of new, clean energy industries, providing American workers with the opportunities to build the equipment of the renewable revolution here in the US.  The 48C tax credit incentivizes exactly that: it’s a 30% credit going to domestic companies building domestic capacity to meet this new and growing source of demand.  And that means instead of importing these goods, we can build them here for our markets, and like Cree, sell them abroad into others’ markets (80% of Cree’s revenue comes from exports).

The Recovery Act included $2.3 billion for the 48C program, but we quickly got more applications than we had money for.  Given that a) we have a bunch of good applications we’d like to support, and b) we want to keep planting those seeds to grow new jobs today and new industries tomorrow, the President took the logical step of calling for a $5 billion expansion of the program.

Well, it’s one thing to hang around DC and try to make the case for the extension, but we thought we should also hit the road with the Vice President’s Middle-Class Taskforce and check this Cree story out for ourselves.
The factory was incredibly impressive.  They employ about 1,500 workers in their Durham headquarters, and a couple of the engineers were kind enough to show me and Ron Bloom (the Administration’s Senior Counselor for Manufacturing Policy) part of the production process, the part where they test the LED lights to make sure they’re flawless.

They’ve got multiple layers of quality control and when it’s all done, you end up with this strip of LED lights, ready to go into a huge variety on end-user products.   LEDs can light up your smart phone or your parking lot, and relative to conventional lights, they can reduce energy use by more than 60%.

We spoke to Cree’s CEO about the tax credit and he stressed two points.  One, it was instrumental in their decision to hire 375 new workers this year and their plans to add 300 more next year.  But it was also a critical motivator in bringing in private capital from the sidelines.  Once investors saw that the Federal government was serious about seeding investment in clean energy, they were ready to take the plunge themselves.  This public/private partnership is essential to bringing these investments, and the jobs they create, to scale.

Cree, the Recovery Act, and 48C are a true American success story.  We’re going to do all we can to keep that story going.

LED chips being made at Cree, where Vice President Joe Biden is touring, Durham, North Carolina March 18, 2010. (Official White House Photo by David Lienemann)

Jared Bernstein is Chief Economic Advisor to the Vice President

Throw a rock in a still pond and you will observe many ripples.

Throw a Recovery Act program in a stagnant economy and you will observe many jobs.

Therein lies the lesson from our latest entry of the Recovery Act in Action, thanks to some truly thorough journalism by Robert Gavin of the Boston Globe.

Gavin looked at the ripple effects, or—if you want to be boring—multipliers, from $77 million in Recovery Act contracts awarded to Reveal Imaging Technologies (RIT), a manufacturer of airport security equipment in Bedford, MA.

RIT reports that thanks to the Recovery Act-funded contracts from the Transportation Security Administration, they’ve added nearly 40 jobs over the past year and they’re still hiring.  They’ve expanded their plant capacity, more than doubling the size of their facility.

But what Gavin’s article shows is that beyond these direct hiring effects, there’s a lot more upstream and downstream job creation generated by this type of activity.  So far, RIT has subcontracted parts of its Recovery Act projects to 21 other companies in 12 states “that make components or provide services for its advanced scanning machines.”

For example, an RIT subcontract helped reduce planned layoffs at a firm that assembles conveyor systems.  Same with a machine tool shop, whose “metal cutting machines, silent several months ago, are humming again” thanks largely to another RIT subcontract.

I spoke to the owner of that machine shop, Jack McGrail.  He told me that most of 2009 was pretty dismal and that if things didn’t improve he was going to have to let some folks go.  Then, in November, the RIT order generated by the Recovery Act came in, and, as Jack said, “it saved me from laying two guys off and I was able to add one more.”

That’s one type of multiplier effect—the jobs created by firms providing inputs to the final product.  But there’s another type that’s also important: the activity caused when people earn more and go out and spend it.  Gavin picked up this kind of activity too by visiting Rebecca’s Café, a restaurant near RIT that reports a 15% increase in sales since RIT expanded its workforce.

The evidence around the RIT case supports something economists have known since Keynes taught it to us: the jobs you directly create through government spending at a time of recession are just the tip of the iceberg. 

Thanks to the Recovery Act, there are hundreds of thousands of teachers in classrooms and police on the beat, construction workers fixing roads, weatherizing and rehabbing buildings, engineers building out the smart grid and planning new high-speed rail lines, and much more.  But as with RIT, for each one of these jobs, there are many others helping to supply materials and services to these firms and workers.

We’ll be throwing a lot more stones in the water in coming months, and I’ll be sure to keep posted on both the splash and the ripples.

Jared Bernstein is Chief Economic Advisor to the Vice President

He’s wrong about that.  Not only does he leave out a major chunk of Recovery Act spending, but the chunk he leaves out includes the programs that are targeted most directly at unemployment.   When you put those data back in, as we do below, you get a correct sense of the extent to which the Act is effectively targeting people and places that need help.

Glaeser’s blog post is based on data reported by direct recipients of Recovery Act, which only covers certain programs—those in which the Recovery Act makes a grant or gives a contract or loan to an entity that will perform a project, like fixing a bridge.

But the chunk he leaves out includes payments that go straight to individuals in need.   Since his targeting measure is unemployment, the most important omission here is the increased Unemployment Insurance payments that the Recovery Act provided – tens of billions of dollars of aid that have provided a crucial lifeline to more than 20 million unemployed workers during this downturn.  

He also leaves out major aid to states through the Medicaid system, which has helped prevent layoffs of teachers and other public servants across the country – and which, by the way, was distributed based on a formula that explicitly considers a state’s unemployment rate (such data are publicly available here).

Lo and behold, when you actually look at the entire Recovery Act, the negative correlation Professor Glaeser complains about disappears.   This is, of course, no surprise – if you leave out the Recovery Act programs that are targeted at economic hardship, the Recovery Act will look to be poorly targeted.  And by the way, these programs account for over $120 billion in funds put to work so far, so we’re not talking small change here.

Here is the very different picture you get when you  look at these targeted programs  – expanded unemployment insurance, aid to states through the Medicaid system, food stamps, emergency grants to the Temporary Assistance for Needy family system, job training, and youth summer employment:

And then there’s another side of this story.   As the figure shows, the programs that are targeted at unemployment are doing their job.  But not every program in the Recovery Act is intended to send money the states with the highest unemployment rates. 

In fact, that’s why the package is called the American Recovery and Reinvestment Act – it’s designed not just to get aid to those who need it most, but to make investments that will help lay the foundation for robust, sustainable growth in the future.

The Recovery Act cannot meet the vision of the President and Vice President if we were to limit it solely to projects in states with higher than average unemployment.   Throughout the country, it must make key investments in infrastructure, including not just roads and bridges but transit, high-speed rail, broadband, clean energy, and the smart grid.  And even when it comes to good, old-fashioned roads and bridges, those investments have to be made where they’re needed, not just wherever unemployment is the highest. 

Glaeser raises perfectly valid and important points about making sure our investment decisions are smart ones, not driven by politics or outdated formulas.  And that’s what we’re trying to do here.  When it comes to both recovery and reinvestment, the Act is hitting the target.

Jared Bernstein is Chief Economic Advisor to the Vice President, and Executive Director of the Middle Class Task Force