American Crossroads Attacks Hodes For Support Of Economy-Boosting Stimulus

September 22, 2010 11:48 am ET

American Crossroads' new ad attacks Rep. Paul Hodes (D-NH) for his support of the American Recovery and Reinvestment Act (otherwise known as the stimulus). The ad claims that Hodes' support for the "pork-filled stimulus bill" shows that he is not a "real fiscal conservative." However, the ad mischaracterizes stimulus-funded projects and ignores the benefits of the bill. In fact, the Recovery Act saved millions of jobs, lowered unemployment, and boosted the nation's GDP. In addition, American Crossroads criticizes Hodes for authorizing $39 million for "office upgrades," funding which was actually sought by the Kansas legislature.

American Crossroads: "Fiscal"

In New Hampshire, Congressman Hodes claims: "You deserve a senator who's a real fiscal conservative, and who gets rid of the pork." But Hodes voted for the pork-filled stimulus bill. 1.9 million dollars to study ants in Africa. 39 million dollars for office upgrades for politicians. Billions wasted and unemployment still higher. No wonder the Union Leader says: "The guy just can't tell the truth." American Crossroads is responsible for the content of this advertising.

Experts, Statistics Agree: Stimulus Bill Saved Millions Of Jobs And Turned The Economy Around

The Economy Shed Almost 8 Million Jobs Under Republican Policies Before The Recovery Act Was Passed.  According to economist Robert J. Shapiro:

From December 2007 to July 2009 - the last year of the Bush second term and the first six months of the Obama presidency, before his policies could affect the economy - private sector employment crashed from 115,574,000 jobs to 107,778,000 jobs. Employment continued to fall, however, for the next six months, reaching a low of 107,107,000 jobs in December of 2009. So, out of 8,467,000 private sector jobs lost in this dismal cycle, 7,796,000 of those jobs or 92 percent were lost on the Republicans' watch or under the sway of their policies. Some 671,000 additional jobs were lost as the stimulus and other moves by the administration kicked in, but 630,000 jobs then came back in the following six months. The tally, to date: Mr. Obama can be held accountable for the net loss of 41,000 jobs (671,000 - 630,000), while the Republicans should be held responsible for the net losses of 7,796,000 jobs. [, 8/10/10, emphasis added]

Based on Shapiro's research, the Washington Post's Ezra Klein created the following chart showing net job losses before and after the Recovery Act was enacted:

[Washington Post8/12/10]

CBO: The Recovery Act Created Jobs, Lowered Unemployment, And Boosted GDP.  According to the nonpartisan Congressional Budget Office, through the second quarter of 2010, the American Recovery and Reinvestment Act:

  • Raised the level of real (inflation-adjusted) gross domestic product (GDP) by between 1.7 percent and 4.5 percent,
  • Lowered the unemployment rate by between 0.7 percentage points and 1.8 percentage points,
  • Increased the number of people employed by between 1.4 million and 3.3 million, and
  • Increased the number of full-time-equivalent (FTE) jobs by 2.0 million to 4.8 million compared with what those amounts would have been otherwise. [CBO,8/24/10]

Reuters: The Recovery Act May Have "Prevented The Sluggish Economy From Contracting" Between April And June.  According to Reuters

The massive U.S. stimulus package put millions of people to work and boosted national output by hundreds of billions of dollars in the second quarter, the nonpartisan Congressional Budget Office said on Tuesday.

CBO's latest estimate indicates that the stimulus effort, which remains a political hot potato ahead of the November congressional elections, may have prevented the sluggish U.S. economy from contracting between April and June.

CBO said President Barack Obama's stimulus boosted real GDP in the quarter by between 1.7 percent and 4.5 percent, adding at least $200 billion in economic activity. [Reuters via ABC News, 8/24/10]

Princeton, Moody's Economists Say "Highly Effective" Government Response To Crisis Saved 8.5 Million Jobs.  According to the New York Times: "Like a mantra, officials from both the Bush and Obama administrations have trumpeted how the government's sweeping interventions to prop up the economy since 2008 helped avert a second Depression. Now, two leading economists wielding complex quantitative models say that assertion can be empirically proved. In a new paper, the economists argue that without the Wall Street bailout, the bank stress tests, the emergency lending and asset purchases by the Federal Reserve, and the Obama administration's fiscal stimulus program, the nation's gross domestic product would be about 6.5 percent lower this year. In addition, there would be about 8.5 million fewer jobs, on top of the more than 8 million already lost; and the economy would be experiencing deflation, instead of low inflation. The paper, by Alan S. Blinder, a Princeton professor and former vice chairman of the Fed, and Mark Zandi, chief economist at Moody's Analytics, represents a first stab at comprehensively estimating the effects of the economic policy responses of the last few years. 'While the effectiveness of any individual element certainly can be debated, there is little doubt that in total, the policy response was highly effective,' they write." [New York Times7/27/10, emphasis added]

African Ants & Office Upgrades For Politicians

Ant Research Money Created Jobs And Funded "Big Impact" Study.  In a "Truth Test" article addressing the validity of another American Crossroads ad attacking Michael Bennet (D-CO) for his support of the stimulus, Denver NBC affiliate 9 News reported:

However, the two examples cited in the commercial don't remotely account for billions in government spending. This is the first time in the Truth Test's decade in existence that it has critiqued "research on ants" and the "effects of cocaine on monkeys." We are pleased to bring you this information, as it was illuminating to us as well.

The first example dealing with ants is in reality a $1.9 million grant to the California Academy of Sciences to send researchers to the Southwest Indian Ocean Islands and east Africa to chronicle some of most exotic of the 22,000 ant species worldwide. The stimulus money created 16 jobs in the process. The principal researcher on the project said, "Consider that the collective weight of all the ants in the world is equal to the weight of all the world's humans. It's a big subject with a big impact. That alone makes ants worthy of scientific study." (Source:

[, 9/2/10; in text citation original]

Kansas Will Save $840,000 In Interest Through Recovery Act-Funded Bond Program. According to the Associated Press, "Kansas is taking advantage of a program created by this year's stimulus legislation to lower borrowing costs for the $285 million restoration. It is financing the 12-year project with bonds and expects to save $840,000 in interest costs through the Build America Bonds program. The state plans to issue nearly $39 million worth of bonds this month for the renovation, an installment approved by the Legislature earlier this year. That's not enough to finish the work, but it will allow the state to start the fourth and final phase of the renovation. 'If we can save some money, that's very important,' Senate President Steve Morris, a Hugoton Republican, said Friday." [, 8/7/09, emphasis added]

Kansas Statehouse Renovations Aim To Boost Tourism, Increase Topeka Revenues By $3 To $4.5 Million Per Year. According to the Topeka Capital-Journal: "Utah and a handful of other states renovating their Capitols in the past 15 years offer a glimpse of the potential economic impact Topeka could receive when Kansas' Statehouse renovation is completed. Most of those states, though not all, have seen spikes in visitors, and some projections for the Kansas construction show an increase of 30,000 to 60,000 visitors a year. [...] Simmons, with Visit Topeka Inc., said a tourist to the capital city spends an average of $100 per day. She said convention-goers and those who stay overnight throw down about $150 per day. If the conservative projection of an additional 30,000 visitors post-renovation comes true, Topeka would see a $3 million to $4.5 million infusion." [Topeka Captial-Journal, 2/15/09, emphasis added]

Build America Bonds Are Awarded By State And Local Legislatures, Not Congress

IRS: Recovery Act "Authorizes State And Local Governments To Issue Build America Bonds." According to an April 3, 2009 press release by the IRS, "The American Recovery and Reinvestment Act of 2009 creates the new Build America Bond program, which authorizes state and local governments to issue Build America Bonds as taxable bonds in 2009 and 2010 to finance any capital expenditures for which they otherwise could issue tax-exempt governmental bonds. State and local governments receive a direct federal subsidy payment for a portion of their borrowing costs on Build America Bonds equal to 35 percent of the total coupon interest paid to investors. This new program is intended to assist state and local governments in financing capital projects at lower borrowing costs and to stimulate the economy and create jobs." [, 4/3/09]

Kansas Legislature Authorized The Use Of Build America Bonds. According to The Bond Buyer: "Kansas will finance the fifth phase of a multi-year reconstruction project at the state capitol in Topeka with proceeds from tomorrow's competitive offering of $43.6 million of bonds by the Kansas Development Finance Authority. The sale will include $3.7 million of tax-exempt revenue bonds and $39.7 million of taxable Build America Bonds ... Lawmakers authorized the current bonds and the anticipated 2011 debt for statehouse work earlier this year." [The Bond Buyer, 7/7/10, via Nexis, emphasis added]