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Economic Stimulus 101

Posted March 12, 2009
 
Economic Stimulus 101

Can we spend our way out of a bad economy? Explore the costs, benefits and impacts.
$787

billion

Total value of the American Recovery and Reinvestment Act signed into law by President Obama on Feb. 17, 2009.
 

Note: Adobe Flash is required to view the videos. Download it here.

Basic Overview
Professors describe the background of the economic crisis and stimulus plan:

“The basic problem we’re facing now is insufficient spending.”
⊕ Launch video

“[The crisis] started in financial markets… and we are now in a nervous part of the recession.”
⊕ Launch video

“[The bill is] a fiscal stimulus package and it’s absolutely necessary.”
⊕ Launch video

“It’s not just a financial crisis, it’s a much deeper crisis of our economic system.”
⊕ Launch video

“None of us truly understand what happened and how to fix it.”
⊕ Launch video
 
Where is all this money coming from?

“The money comes from borrowing.”
⊕ Launch video

“We will run a short-term deficit in order to finance this program.”
⊕ Launch video

“You need to make a distinction between the gross expenditure and the net effect on government budgets.”
⊕ Launch video
 
And where is the money going to? What’s in the bill?

A breakdown of tax cuts and government spending categories in the stimulus plan.
⊕ Launch video

“It breaks up into three broad categories: tax cuts, aid, and direct spending by government.”
⊕ Launch video

“There’s just little bits of money going all over the place; a lot of this money isn’t being spent any time this year.”
⊕ Launch video
 
What is the effect on state and local budgets and spending?

State and local governments must operate under a balanced budget, which leads to many cuts in a bad economy.
⊕ Launch video

“I was a little disappointed to see that there’s been a pull-back from the aid to state and local governments.”
⊕ Launch video

Unemployment
Will the stimulus plan help reverse the trend in rising unemployment? Does it matter where we put people to work?

“At least to the extent that it will slow the bleeding. We’re applying a tourniquet right now.”
⊕ Launch video

“If there is spending, then firms will hire workers because they’ll see a demand.”
⊕ Launch video

“The real net benefit comes if we actually make [workers] produce something that is useful.”
⊕ Launch video
 
Which industries have been hit hardest by job losses? Which industries show the most promise?

“A lot of jobs have vanished in the financial services industry.”
⊕ Launch video

“There is vibrancy, there is some hope, for new products and new technologies.”
⊕ Launch video

“If I were young, I would pick industries that are young now and will be bigger in the future.”
⊕ Launch video

 
Produced by Jackie Hai, Richard Caesar and Frank Godinho, AmherstWire.com.

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The digital-first, student-run magazine of the University of Massachusetts Amherst Journalism Department
Economic Stimulus 101