State policymakers play an important role in addressing economic shocks. Additionally, the federal government’s tax and spending investments are crucial. But not all stimulus strategies are equally effective. Amid the COVID-19 pandemic, Hawaiʻi can learn a lot from evaluating various initiatives the federal government under the Obama Administration used to pull the United States out of the Great Recession. We’ve assembled the various initiatives into a pair of tables designed to evaluate the effectiveness of each strategy.

The first table summarizes federal initiatives taken during the Great Recession to help people and businesses, including the amount of money the government invested. The second judges each initiative’s “bang for the buck” as an economic stimulus.

Table 1 summarizes program spending, tax cuts, and appropriations bills aimed at reducing human misery and improving the economy.

Table 2 summarizes the effectiveness of various economic stimulus strategies as presented by Moody’s Analytics in written testimony before the Joint Economic Committee of Congress. For every dollar spent, this was the economic return:

It’s important to revisit the policies our government implemented during the Great Recession. We need to understand what worked and what didn’t so we can be prepared to make smart financial decisions now that the economy is, once again, facing a destabilizing contraction.   

Government spending decisions have a big impact on how well we, as a community, weather a recession. However, these decisions are just as important to the state’s post-recession economy and the long-term well-being of residents as they are to withstanding the actual recession.

The state may have to cut its budget, but not all budget cuts are equal. Some services are essential and need full support, and diminishing them through across-the-board reductions could end up making matters worse for Hawai‘i residents in the long run, or make it more difficult for people to get back on their feet once the recession ends. More information about the Great Recession can be found in our report, “Recession in Review,” available for download here.