Obama: Stimulus package prevented another depression

On the anniversary of his huge stimulus bill, President Barack Obama admitted Wednesday that millions of Americans had yet to feel the economic recovery, but insisted he had staved off a depression.

Obama also lashed out at Republicans he accused of misrepresenting the aims and achievements of the $862-billion mix of tax cuts and government spending, which he said had saved or created two million jobs.

"One year later, it is largely thanks to the Recovery Act that a second depression is no longer a possibility," Obama said, at an event marking the anniversary of the day he signed the bill last year in Denver, Colorado.

"We acted because failure to do so would have led to catastrophe."

Obama's remarks came the same day as the New York Times' David Leonhardt reported that the "best-known economic research firms" agree the stimulus package created somewhere between 1.6 million and 1.8 million jobs, with the final tally expected to be around 2.5 million.

But, as Leonhardt pointed out and as the Obama administration has argued for months, that economic activity doesn't translate into more jobs for Americans -- only fewer jobs lost than would otherwise have been lost.

"The reasons for the stimulus’s middling popularity aren’t a mystery," Leonhardt writes. "The unemployment rate remains near 10 percent, and many families are struggling. Saying that things could have been even worse doesn’t exactly inspire. Liberals don’t like the stimulus because they wish it were bigger. Republicans don’t like it because it’s a Democratic program. The Obama administration hurt the bill’s popularity by making too rosy an economic forecast upon taking office."

Obama has an uphill climb convincing voters that the stimulus is working. A New York Times poll (PDF) from last week shows only six percent of respondents believe the package created any jobs at all.

Republicans went on the offensive following Obama's comments. CNN reports that the Republican National Committee released a video stating that "the American people are tired of politicians who don't admit when their policies don't work. The president and the Democrat Party can either admit their policies failed and change course now or continue their binge spending agenda and face certain defeat at the polls in November."

"Americans have lost millions of jobs, the unemployment rate continues to hover near 10 percent, the deficit continues to soar and we're inundated with stories of waste, fraud and abuse," said Republican Senate Minority Leader Mitch McConnell. "This was not the plan Americans asked for or the results they were promised."

"We acted because failure to do so would have led to catastrophe," Obama argued in his address at the White House. " We acted because we had a larger responsibility than simply winning the next election. We had a responsibility to do what was right for the US economy and for the American people."

With unemployment at 9.7 percent and predicted to only come down slowly as economic growth gathers pace, Obama admitted that for many Americans, the misery was not yet over.

"Millions of Americans are still without jobs. Millions more are struggling to make ends meet. It doesn't yet feel like much of a recovery. I understand that."

Vice President Joseph Biden, charged with ensuring wasted spending does not tar the stimulus plan, delivered a progress report on the plan's first year.

The bill added two to three percentage points to real GDP growth in the second quarter of 2009; between three and four percentage points in the third quarter, and between 1.5 and 3.0 points in the fourth quarter, the report said.

"The first quarter last year, this economy shrunk over six percent. In the last quarter of this year, it grew over six percent. Something's happening. Something positive is happening," Biden said.

Obama condemned Republicans who used the occasion to brand the mammoth plan a huge waste of money that has done little to create jobs.

"There are those, let's face it, across the aisle who have tried to score political points by attacking what we did, even as many of them show up at ribbon-cutting ceremonies for projects in their districts."

The stimulus package was initially estimated at $787 billion, which is the number the Obama administration continues to use. But the Congressional Budget Office has since estimated the package's cost to be closer to $862 billion.

-- With AFP

The following video, of President Obama's remarks on the stimulus, was uploaded to the Web by the Associated Press, Feb. 17, 2010.