"That's nonsense. Opinions differ widely and many leading economists believe that its impact has been small," says Boskin, a former chairman of the White House Council of Economic Advisers.
Obama has repeatedly stated in one form or another that "It is largely thanks to the Recovery Act that a second depression is no longer a possibility."
The most common definition of a depression is a sustained period when GDP or consumption drops by at least 10 percent. But GDP fell in this recession by 3.8 percent, and 2 percent in consumption. Yes, it was severe, but Obama, by "revoking the laws of arithmetic," was tripling his own economic adviser's estimate of the stimulus' effect on the economy, Boskin says. More recently, Obama continues to insist that the economy will not be weakened in any way if the Bush tax cuts on the two top income tax brackets expire at the end of this year.
But his own economic advisers have conspicuously disagreed with him. Christina Romer, the recently departed chairwoman of his Council of Economic Advisers, in a paper she and her husband wrote in the American Economic Review, flatly concluded that "tax increases are highly contractionary."
They based their conclusion not on politics but on stubborn facts that show higher income tax levels are a drag on economic growth, investment and business expansion, reducing incomes and lowering consumer demand.
No sooner had Obama's economic adviser and budget director Peter Orszag left his job in the White House than he was telling the country in a New York Times op-ed that raising taxes in a recession would further weaken the economy.
"Higher taxes now would crimp consumer spending, further depressing the already inadequate demand for what firms are capable of producing at full tilt," he said -- advice he had surely given Obama before leaving.
Obama told a CNBC economic forum recently that he's "done the math" and that the government cannot afford to give tax cuts to the rich; keeps repeating that the cuts would go to lots of billionaires. (Forbes magazine says there are only 469 of them in the country.) Actually, a CBO analysis found that the 2001-2003 tax cuts were responsible for less than 14 percent of the deficits (less under a dynamic model analysis that weighed their impact on growth). The recession played the biggest role in the mounting deficits, as federal tax revenues plummeted, along with Obama's massive spending increases for his stimulus and the rest of his agenda.
Obama keeps saying the Bush tax cuts produced record deficits, but the budget deficit was a manageable $161 billion in 2007, the year before the recession hit. Another stubborn fact the president chooses to ignore.