The Cash for Clunkers program “has been an unqualified success,” and the stimulus is working, Vice President Biden said today.
He spoke to reporters after a meeting with several of the administration’s economic officials, including Christina Romer, chair of the Council of Economic Advisers; Peter Orszag, director of the Office of Management and Budget; Larry Summers, head of the National Economic Council and Chief Economist and Economic Policy Advisor to the Vice President Jared Bernstein. He took no questions.
Here’s the full transcript:
We’ve just finished a briefing with the economic team about the impact and role of the Recovery Act in the more optimistic projections that are being — that we’re seeing. Six months ago we gathered here in the White House, worrying about the U.S. economy and whether or not it was falling off a cliff. And today, analysts are trying to determine if — if an official recovery is already underway, or to quote my good friend Larry Summers, he said, “Six months ago we were talking about whether or not this recession was going to turn into a depression. And now today, we’re sitting here talking about whether or not — not when, not if, but when the recession will turn into a recovery.”
So it’s a significant change in the last six months. And that’s because we are — we’re starting to see some signs of stabilization in key parts of the economy. In the final quarter of last year and the first quarter of this year, the loss rate of GDP was around 6 percent. And in the most recent quarter, GDP fell a much lower rate at 1 percent. And many economists, many economists — left, right, and center — have attributed this in large part to the Recovery Act, one piece of the three-pronged approach that the administration has put together to get this economy moving again.
The Recovery Act was designed to do three things. It’s been mischaracterized, intentionally and unintentionally, by a lot of people. It really has three pieces to it. First is rescue, the second is recovery, and the third is reinvestment.
Now, you know, there’s now evidence that it’s accomplished the goals it set out to do, or on the way of accomplishing those goals. After falling the prior six months, state and local spending has increased 2.4 percent last quarter — and a very unexpected reversal — that links directly to the fiscal relief we have provided to the states. Household income has gotten a much needed boost in the last quarter, growing at a yearly rate of almost 5 percent following declines in the previous nine months. And business investment contracted less than expected as confidence is slowly — slowly returning to the economy.
Americans are now confident enough that with certain incentives they’re willing to start to go out and spend again. For example, the tax credit for new home buyers has helped stabilize sales and prices of new and existing homes, giving it a boost to, an incentive to — over 250,000 families have gone out there and purchased a new home without reliance on unsound credit practices of the past.
And the Cash for Clunkers program has been an unqualified success. It has boosted demand for cars and spurred consumer spending. And our critics say they don’t think this program is helping. Well, all the economic indicia point to the opposite direction — it is helping. I think it would be hard to tell the young family who just bought their first home because of the tax credit or the thousands of people who have just traded in gas guzzlers for more efficient cars that this is having no impact.
Now, don’t get me wrong — we still have a long way to go. “Less bad” is not the same as “good.” We know that growth in GDP is necessary but not sufficient. It’s not a sufficient marker of recovery. For one thing, it’s not going to occur until there are jobs. My grandpop used to have the expression, he said, when the guy up the line is out of work, it’s an economic slowdown; when you’re brother-in-law is out of work, it’s a recession; when you’re out of work, it’s a depression. Well, it’s still a serious problem for millions of unemployed Americans. Too many people are out of work. Too many families are in pain. And when that’s no longer the case, that’s when we will have recovery.
But I can tell you today without reservation: The Recovery Act is working. And when we do recover, when we finish rebuilding, when we finish rescuing the thousands of people — tens of thousands of people who have fallen into a black hole without our help with unemployment insurance and COBRA and FMAP and the like, when we finish this process we also will have been in the process of having, through the Recovery Act, begun to lay the platform for a much stronger, more stable economy in the investments that we’re making through this Recovery Act.
So let me conclude by saying that I think — and it’s a fairly widespread and widely held view — that the Recovery Act is working, it was necessary, it continues to be necessary, and we’re going to see to it we execute the remaining portion of the act with the same kind of fidelity (inaudible).
Thank you very much.
