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Policy: Budgets & Deficits

White House report says $763 billion stimulus was free

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Politics,Beltway Confidential,Opinion,White House,Joel Gehrke,ARRA,Economy,Budgets and Deficits

President Obama's $763 billion stimulus was basically free, according to a White House report that said the American Recovery and Reinvestment Act was so successful that it paid for itself.

"The Recovery Act had at most a minimal impact on the long-run debt — and the additional growth it produced likely further reduced or eliminated its cost," the White House Council of Economic Advisers reported Monday, the fifth anniversary of the stimulus (original emphasis). "Traditional budget scoring indicates that, because the Recovery Act was temporary, its impact on the long-run fiscal situation was minimal, adding less than 0.1 percent of GDP to the 75-year fiscal gap. This calculation may overstate the true cost of the Recovery Act because the direct output gains it produced are sufficient to cover one-quarter of its projected cost."

Elsewhere in the report, the White House economics note the latest "fiscal support" figures. "At its passage, CBO estimated that the Recovery Act would cost $787 billion, although this estimate would increase as the full magnitude of the recession became apparent," the report says. "The most recent CBO estimates show that the fiscal support from the Recovery Act will total $832 billion through 2019. Of this total, $69 billion was allocated to a routine set of patches for the Alternative Minimum Tax. This part of the Act, a continuation of a long-standing practice, is best thought of as ongoing fiscal policy, not as a temporary fiscal impulse designed specifically to counter the effects of an economic recession. Excluding the AMT patch, the Recovery Act provided a total fiscal impulse of $763 billion."

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