CEA's estimate that payroll employment was 2.4 million higher to as of [the first quarter of 2011] than it would have been without ARRA is very similar to my estimate," Zandi says. "I consider this to be a significant benefit to the economy's performance over the past more than two years. This benefit is fading, but this is by design.
According to Beutler, "In its report, CEA isn't revising its claim about ARRA's effectiveness downward -- it's accounting for the fact that the stimulus' impact on current employment is less than it was when the stimulus was pumping out more money, and will continue to decline. Years from, when the stimulus is responsible for few if any existing jobs, it won't be evidence of the stimulus' failure either."
Obviously, individuals who gained jobs proceeded to pay taxes as well as create demand for goods and services, though clearly not to a sufficient extent. This, and the continuing attack from Republicans, eerily confirms the prediction made by Paul Krugman on January 6, 2009:
And that gets us to politics. This really does look like a plan that falls well short of what advocates of strong stimulus were hoping for — and it seems as if that was done in order to win Republican votes. Yet even if the plan gets the hoped-for 80 votes in the Senate, which seems doubtful, responsibility for the plan’s perceived failure, if it’s spun that way, will be placed on Democrats.
I see the following scenario: a weak stimulus plan, perhaps even weaker than what we’re talking about now, is crafted to win those extra GOP votes. The plan limits the rise in unemployment, but things are still pretty bad, with the rate peaking at something like 9 percent and coming down only slowly. And then Mitch McConnell says “See, government spending doesn’t work.”