Economist Zandi argues economy would be in worse shape without stimulus

“I think we’d be in a measurably worse place if not for the stimulus,” Mark Zandi, the chief economist for Moody’s Analytics, told reporters in Washington.

Zandi said he disagreed with House GOP Leader John Beohner’s assessment the stimulus had done nothing to help the economy and create jobs, but avoided direct criticism of the Ohio congressman.

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Zandi advised Democrats on the stimulus and has continued to advise congressional leaders on the economy. He served as an adviser to GOP presidential candidate Sen. John McCain in 2008.

Democrats have seized on Zandi’s comments and a report issued Tuesday by the Congressional Budget Office that found the stimulus has added as many as 1.4 million to 3.3 million jobs to the economy.

The party is struggling to push out the message that the stimulus helped the economy in the face of a 9.5 percent unemployment rate that Zandi and other economists say could rise this fall.

Democrats have been hampered by a run of bad economic news, including a spike in weekly unemployment claims and a housing market that continues to fall.

Zandi offered several criticisms of the stimulus. He said he and others underestimated the severity of the recession and that it should have been larger.

The package approved by Congress cost $787 billion, but CBO estimates its 10-year cost will now run closer to $814 billion.

Zandi said the package also should have included a payroll tax holiday to provide more immediate stimulus to the economy, and it was a mistake to have it contain so much infrastructure spending. He said the infrastructure dollars could be good for the economy but are not providing the immediate effects necessary to stimulate quick growth.