The American Recovery and Reinvestment Act, or the $787 billion economic stimulus plan signed into law in February, is designed to create jobs. Well, scratch that. It is designed to “create or save” jobs; approximately 6.8 million jobs over a four-year span, to be exact.

In a statement released by the White House regarding their “Roadmap to Recovery”, ten major projects have been targeted for the next three months:

“As a result of this accelerated pace of activity, over 600,000 jobs are expected to be created or saved by the Recovery Act in the second 100 days (of the administration) – four times the number created or saved in the first 100 days.”

Amongst the new wave of jobs will be 125,000 part-time summer youth jobs, 135,000 education jobs and rehabilitation work on 98 Airports and over 1,500 highways.

Ed DeSeve, special adviser to the president and the Office of Management and Budget for implementing the Recovery Act (czar?), said it will be up to fund recipients to estimate the number of jobs created or saved:

“…Recipients of stimulus funds, which include state and local governments as well as contractors, may choose to rely on subrecipients or subcontractors to provide such data. We’re doing our best to not require recipients to be in the verification business. There is no incentive for fraud here.”

But William Beach, director of the Center for Data Analysis at the Heritage Foundation, offers a different point of view. After all, if the President is going to gauge the success of his stimulus on job creation and saving, there should be a reliable way to track the stats.

“State highway departments are ‘notoriously creative,’ in how they document spending and employment,” said Beach. And he would know; Beach was a Missouri state budget officer in the 1980s when President Ronald Reagan signed the 1983 Employment Act, a major effort to stimulate the economy through construction jobs.

Warned Beach:

“Determining who was working on these projects was very difficult. To say there is no incentive for corruption or bad dealing is enormously naïve, or worse…It’s important to know how many new jobs are actually created through Recovery Act projects versus the number of positions transferred from a different part of a department’s payroll…With state agencies and localities under enormous economic pressure to receive stimulus funds, they will naturally seek to portray their spending programs as desirable as possible. One way to do that is to show that they’re employing a lot of people.”

Peter Schiff, president of Euro Pacific Capital and an Austrian economist, states, that in theory, government cannot “create” anything:

“Governments cannot create but merely redirect. When the government spends, the money has to come from somewhere. If the government doesn’t have a surplus, then it must come from taxes. If taxes don’t go up, then it must come from increased borrowing. If lenders won’t lend, then it must come from the printing press, which is where all these bailouts are headed. But each additional dollar printed diminishes the value of those already in circulation. Something cannot be effortlessly created from nothing.”

And the same is true for government job “creation.” When government expands, it only comes at the expense of jobs lost in the private sector. When government favors one industry over the other by offering incentives like tax subsidies, they create an inefficient economy. Propping up inefficient jobs, as they are with Chrysler and General Motors (GM), doesn’t allow for a long-run growth or creation of jobs. If both companies would have been able to go into bankruptcy immediately, completely free themselves from the legacy costs imposed by the unions (all without using a taxpayer dime), they’d have an opportunity for a “reinvention” as a fiercely competitive and efficient automaker. The “cash for clunkers” subsidy scheme, CAFE standards and “green jobs” are all prime examples of favoring an industry, which causes inefficiency.

Check out the "green jobs" link above

The “cash for clunkers” is especially fun. It offers a $4,500 credit to new car buyers who trade in their old rigs, for one that gets at least 10 mpg better. This after the government just increased CAFE standards to 35 mpg by 2020, and took ownership in GM and Chrysler; it all comes full circle.

Said simply: the factors of production must be handled by free enterprise. The more factors of production the government seizes, the less efficient we become. Inefficiency lowers productivity, stifles competitiveness and lowers living standards.