ABSTRACT
The recession that began in the United States in 2007 was the most severe and long-lasting since the Great Depression of the 1930s. Even after the economy started to recover, growth was slow and job creation weak, with unemployment remaining over 7 percent through 2013. This led to a wide-ranging, and continuing, debate over the best way for government to respond to the recession and its aftermath. An immediate response put in place by the Obama administration in 2009 was a policy of economic stimulus through expanded government spending and tax cuts. The “stimulus package” involved more than $800 billion in new government spending and reduced taxes. This was followed by further tax cuts over the next two years, including a temporary two-percentage-point payroll tax holiday in 2011 and 2012.
