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Home Publications Reports The State and Local Drag on the Stimulus

The State and Local Drag on the Stimulus

May 2009, Dean Baker and Rivka Deutsch

This report shows that the $787 billion included in the 2009 ARRA will not have as much of an immediate effect on the economy as initially anticipated. After subtracting the annual AMT patch and acounting for state level spending and tax cuts, the full effect of federal stimulus will equal a little more than 1 percent of GDP a year, falling far short of what is needed to re-ignite the economy. While the 2009 recovery act was a vital first step towards restoring the nations economic foundation, this paper puts some perspective on the immediate effects of the stimulus.

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