People of a certain age will recall the 2009 Obama stimulus bill, an $800 billion behemoth that funded everything from expanded government benefit checks to green energy boondoggles and supposed shovel-ready jobs. Obama-Biden administration economists predicted that legislation, enacted in response to the Great Recession, would hold unemployment under 8 percent and create millions of jobs. Neither occurred. Instead, unemployment soared to 10 percent and millions of additional jobs were lost, leading Americans to ask, “Where are the jobs?”
REUTERS/Larry Downing
Despite those dismal results, one of that episode’s enduring lessons for liberals is not that the massive 2009 stimulus bill didn’t work. Instead, they insist it simply wasn’t massive enough to be effective. As New York Times columnist Paul Krugman noted in 2014, everyone except a handful of experts “believe(s) that the stimulus was a failure” because “the U.S. economy continued to perform poorly . . . after the stimulus went into effect.” But the true cause of that poor performance was “the stimulus was both too small and too short-lived.”
Longtime Biden economist Jared Bernstein echoed that view when arguing earlier this year for the new administration’s American Rescue Plan as the then-latest response to the pandemic — which at $1.9 trillion was twice the size of the 2009 Obama stimulus: “In our view, the risks of doing too little are far greater than the risks of doing too much.” Following the enactment of that massive partisan spending plan in March, the Biden administration has continued to err on the side of “doing too much.” The American Rescue Plan was followed by a trillion-dollar infrastructure bill, and now the $2 trillion “Build Back Better” social spending plan that was recently passed by the House and is before the Senate. That combined $5 trillion spending spree is just the start, since it masks trillions more in long-run spending.
As the table below displays, this year’s spending spree is noteworthy in another respect: Key provisions are largely just more expensive Obama stimulus policies from 2009. With the Biden administration hoping to make many of these policies a permanent part of the American social policy landscape, former Senator Phil Gramm prophetically suggested in January the US was entering an era of “permanent stimulus.”
Meanwhile, data in the wake of just the first of this year’s bills show that job creation is already falling well short of Biden administration forecasts and inflation is surging more than it has in 30 years. What could possibly go wrong from enacting the Build Back Better plan — the latest and largest part of this massive stimulus spending trifecta?
Comparison of Key Policies from the 2009 Obama Stimulus Bill and 2021 Biden Stimulus Bills
| Policy | 2009 Obama Stimulus Bill | 2021 Biden Stimulus Bills (ARP, Infrastructure, BBB) |
| Refundable Tax Credits | $69B in refundable tax credits. | ARP provided $88B in refundable child credits, along with $9B in refundable EITC payments and $400B in “recovery rebates.” BBB provides $10B in refundable EITC payments, plus $154 billion in refundable child credits spread over 10 years. |
| Food Stamps | $20B for expanded food stamps. | ARP provided $12B in additional nutrition assistance, including for expanded food stamp benefits. In August 2021, the Biden administration permanently expanded food stamp benefits by 25%, increasing annual spending by $20B. BBB includes another $10B for child nutrition programs. |
| Unemployment Benefits | $39B in federal unemployment benefits. | ARP provided over $200B in increased federal unemployment benefits (on top of over $400B provided by prior pandemic laws). |
| Health Insurance | $25B for health insurance assistance. | ARP provided $22B in expanded premium tax credits (PTCs). BBB would expand PTCs by another $55B; it also makes available $10B annually to states for a “health insurance affordability fund” and $7B for “public health infrastructure.” |
| Childcare | $2B for additional childcare over two years. | ARP included $6B for childcare. BBB provides $381B for childcare, generally over six years. |
| Workforce Training | $4B for the Department of Labor Employment and Training Administration. | BBB provides $20B for Department of Labor and Department of Education workforce development. |
| Student Aid | $17B for student financial assistance. | ARP included a $40B “Higher Education Emergency Relief Fund.” BBB provides $11B to increase Pell Grants, among other student aid. |
| Broadband | $7B, including for the “Broadband Technology Opportunities Program.” | The infrastructure law provides $65B for improving internet access, including $42B in “grants to states for broadband projects.” |
| Energy Efficiency and Climate | $45B for energy efficiency and renewable energy programs. | BBB provides over $100B for the extension and modification of renewable energy and other energy credits; $19B for national service and workforce development in support of “climate resilience,” $29B for a “greenhouse gas reduction fund,” $5B for “climate pollution reduction grants,” $3B for “climate justice block grants,” and $40B for Department of Energy loan programs. |
| Clean Water | $6B for “Clean Water and Drinking Water State Revolving Funds.” | The infrastructure law includes $15B for lead pipe remediation. BBB adds $9B for “lead water remediation grants.” |
| Roads and Bridges | $48B for highway construction and transportation. | The infrastructure law includes $110B in new funding for roads and bridges. |
| High-Speed Rail | $8 billion “down payment” on high-speed rail development. | BBB includes $10B for “high-speed rail corridor assistance . . . supporting the planning and development of public high-speed rail projects.” |
| Public Housing | $13B for public housing and other housing assistance. | BBB provides $150B in public housing and related housing “investments.” |
| State Aid | $143B for “State Fiscal Stabilization Fund” and “State Fiscal Relief.” | ARP included $350B in “Coronavirus State and Local Fiscal Recovery Funds.” |
Sources: CBO Score of the 2009 American Rescue and Recovery Act (“Obama Stimulus”), CBO Score of the 2021 American Rescue Plan (ARP), CBO Score of the 2021 Infrastructure Investment and Jobs Act (“Infrastructure”), and Summary and CBO Score of the 2021 Build Back Better (BBB) plan.
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