* CBO says stimulus boosted economy by up to 3.5 pct
* It lowered jobless rate by up to 2.1 pct
(Adds detail, background)
WASHINGTON Feb 23 The massive stimulus package
passed last year to blunt the impact of the worst U.S.
recession in 70 years created up to 2.1 million jobs in the
last three months of 2009, the non-partisan Congressional
Budget Office said on Tuesday.
The package boosted the economy by up to 3.5 percent and
lowered the unemployment rate by up to 2.1 percent during that
period, CBO said.
The report comes as President Barack Obama and his fellow
Democrats are pushing further measures to bring down the 9.7
percent unemployment rate before the November congressional
The $787 billion price tag of the package, officially
called the American Recovery and Reinvestment Act, has prompted
a growing backlash from voters worried about record budget
deficits. Republicans have labeled the package a failure,
though economists on the left and right say it helped ward off
CBO's new report closely resembles its initial estimates
from March 2009, shortly after Obama signed the bill into law.
Though the economy performed more poorly than predicted,
that was not due to the ineffectiveness of the stimulus
package, CBO said.
"In CBO's judgment, that outcome reflects
greater-than-projected weakness in the underlying economy
rather than lower-than-expected effects" of the stimulus, the
research office said.
The package is likely to have the greatest impact this
year, according to CBO. It is expected to boost GDP by between
1.4 percent and 4 percent and bring down the unemployment rate
by between 0.7 percent and 1.8 percent in 2010, higher figures
than last year when many of its programs were being set up. The
impact is expected to trail off over the next two years.
Direct purchasing of goods and services by the federal
government and states have been the most effective provision of
the act, CBO said. Among the least effective: a tax credit for
first-time homebuyers and a tax cut for the wealthy.
Since the start of the recession in December 2007, 8.4
million jobs have been lost. Though the economy started growing
again last year, CBO chief Doug Elmendorf said at a
congressional hearing that any recovery was likely to be slow.
(Reporting by Andy Sullivan, editing by Eric Beech)