Financial News

  • 18 February 2014, 23:03

Stimulus 'Averted Another Great Depression'

A White House report on the fifth anniversary of the economic stimulus has rekindled a partisan debate over the controversial measure passed by Barack Obama.

The report said the $787bn†(£$472bn) spending bill, known as the American Recovery and Reinvestment Act, helped avert another Great Depression.

It said the stimulus saved or created 1.6 million jobs through 2012 and eventually helped end the country's 18-month-long recession in June 2009.

But Republicans were quick to object to the findings of the 70-page report, saying the bill spent too much for too little in return.

House Speaker John Boehner, the top US Republican, said the stimulus turned out to be a classic case of "big promises and big spending with little results".

"Median household incomes are down. Prices on everything from gas to groceries are higher. A new normal of slow growth has set in, with most now saying the worst is yet to come," Mr Boehner said in a statement.

Senate Minority Leader Mitch McConnell said: "Five years later, the stimulus is no success to celebrate.

"It is a tragedy to lament."

White House economic adviser Jason Furman said the economy is "undoubtedly in a stronger position" because it has grown for 11 straight months, although not at a pace that would be considered robust.

Unemployment remains high, at 6.6% in January, though it has fallen considerably since reaching double-digit highs early in the Obama administration.

Mr Obama had been in office only a month when he signed the bill. Democratic majorities in both the Senate and House of Representatives passed over the objections of Republicans.

The battle over the stimulus remains relevant today as the president seeks congressional approval of infrastructure spending intended to create jobs.

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