An excerpt from CBO Director Douglas Elmendorf’s testimony before Congress:
In the absence of any changes in fiscal policy…the shortfall in the nation’s output relative to its potential would be the largest—in terms of both length and depth—since the Depression of the 1930s.
And perhaps even more important, since economists from across the ideological spectrum already agree on the need for a stimulus, Elmendorf estimates the bill’s impact:
[O]utput would be between 1.3 percent and 3.6 percent higher at the end of this year, higher by a similar amount at the end of next year, and 0.5 percent to 1.4 percent higher at the end of 2011…[T]he number of jobs would be between 0.8 million and 2.1 million higher at the end of this year, 1.2 million to 3.6 million higher at the end of next year, and 0.7 million to 2.1 million higher at the end of 2011.
Essentially, Obama could accomplish his goal of saving/creating three to four million jobs through this package alone.
One more point: Republicans have argued that the bill will not do enough to spark the economy, and as an alternative, they’re pushing billions more in tax cuts. The CBO calculated the multiplier effect for a variety of policy options and found that direct purchases by the federal government are one-and-a-half to two times more effective than well-targeted tax cuts. Well-targeted tax cuts are what the Obama administration originally included in the package – tax cuts targeting the lower socioeconomic brackets where no one can afford to save the money. Less-well-targeted tax cuts are what the Republicans offer: see Mitch McConnell’s middle-class tax cut.