The winner of the 2020 presidential election is sure to face a faltering economy due to the coronavirus pandemic, possibly worse than President Barack Obama did when he entered office in January 2009 amid the Great Recession. Joe Biden is looking to turn that experience into a political asset.
Biden, the presumptive 2020 Democratic nominee, spent his first year as Obama’s vice president quarterbacking the Economic Recovery and Investment Act into reality. The $787 billion economic stimulus package, enacted by Democratic majorities in the House and Senate and President Obama, aimed to reverse the worst financial crisis since the Great Depression, triggered by a spate of bank failures the prior year and deep dips in the stock market.
Biden’s experience overseeing the law is now key to his campaign message as he seeks to unseat President Trump. Even with coronavirus curves flattening and states tentatively reopening their economies, the pandemic’s assault on the U.S. economy is sure to remain in effect on Inauguration Day, Jan. 20, 2021.
Since the early days of the primary season, Biden has regularly boasted about how one of his chief accomplishments as vice president was overseeing the stimulus law. Obama, facing one of the first tests in office, named Biden in charge of overseeing the bill’s implementation. The new president sought to leverage Biden’s deep contacts and relationships on Capitol Hill, after 36 years of representing Delaware in the Senate.
The effectiveness of the stimulus remains hotly debated to this day, with liberal economists saying it was too small to grow the economy properly and conservatives contending the money was wasted on state bailouts and unions. The economic recovery from the Great Recession was the slowest since World War II, but Biden has found a way to spin it in his favor.
“Know what I was most proud of? For eight years, there wasn’t one single hint of a scandal or a lie,” Biden said at a campaign stop in June, referring to his oversight of the stimulus money.
In donor meetings, he credits the stimulus package for “help[ing] save this nation from economic ruin” while claiming no money was wasted.
“The money immediately went out, unemployment benefits went out any longer than they did in history, boosting people’s purchasing power,” said Brookings Institution economist Gary Burtless. “The postmortem of its impact [is] that strikingly in the year or two after the recession, incomes in the bottom of the income distribution actually went up.”
Biden is now calling for an expanded stimulus package, with over $6 trillion for extended unemployment benefits and infrastructure jobs “that can be implemented really rapidly,” as well as “dealing with environmental things that create good-paying jobs.”
But there is no consensus about the effectiveness of the 2009 stimulus law or the argument it was scandal-free.
At the time, government watchdogs and reporters logged a number of questionable programs funded by the stimulus package, which included millions in public affairs consultancy fees and highway signs to promote local projects.
In 2010, a CNN survey found nearly three-quarters of people in the United States thought much of the stimulus package was wasted, with 56% opposing the program altogether.
Headlines about the case of Solyndra (a solar panel company that received upwards of $840 million that went bankrupt just four years after it received government-backed loans) fed into public concerns that the average person wasn’t seeing much of the money from the stimulus package.
Conservatives and free-market economists point to economic models provided by the Congressional Budget Office and the Obama administration’s projections about the impact of the stimulus package.
“On the macroeconomics, the 2009 stimulus was a fiasco. It missed every economic target set not only by the CBO but by the Obama White House itself,” said Manhattan Institute scholar Brian Riedl. “The economy performed worse than their own 0% stimulus model. It was worse than no stimulus, according to their own projects.”
In 2009, Christina Romer, chairwoman of Obama’s Council of Economic Advisers, said that the stimulus package would avert 8% unemployment. The number of people nationwide without work eventually soared to 10% and didn’t reach 2006 levels until December 2016.
“Overall, the stimulus was notorious for waste and mismanagement. For two years, following the stimulus bill, newspapers were filled with [stories of] fraud. Payments to dead people, money for a turtle bridge, I remember, was one of the examples,” Riedl said. “The idea that there was no waste is comical. All it takes is a newspaper archive search.”
