On October 18^th, the New England Patriots crushed the Tennessee Titans, 59 to 0. Tennessee’s offense put up a blistering negative seven yards passing and turned the ball over five times. Oddly, it was widely claimed that New England scorched Tennessee’s defense for 59 points. This is incorrect, though. In fact, Tennessee’s defense created/saved 32 points. You see, New England had 13 offensive possessions. Had they scored a touchdown on each possession, they would have scored 91 points instead of a measly 59. Good job Tennessee defense!

Think of New England’s offense as the current recession, Tennessee’s defense as our stimulus-package-aided-economy and Recovery.gov–the government’s website to track the stimulus package’s success–as the scorekeeper and you have a pretty apt analogy for what’s going on. According to Recovery.gov, the stimulus package has created/saved 640,329 jobs as of October 30^th, 2009. (1) President Obama has gone one step further, saying that his policies have “created and saved more than a million jobs.” (2) That sounds great (albeit contradictory) but it also leads one to ask the very simple question: “How exactly did they get these numbers?”

Here’s the problem: the United States has lost approximately 3.3 million jobs since the stimulus package was passed. Unemployment has risen from 7.6% to over 10%. (3) Furthermore, if you include people who are underemployed (working part-time even though they’d prefer to work full-time) or have simply given up on finding a job, unemployment is closer to 20%. (4) So how, exactly, does Obama know he’s saved 640,000 or a million jobs or whatever it is? The exact methodology is difficult to ascertain, but the best explanation I can come up with is an extremely creative imagination.

For example, Talladega County in Alabama claimed that 5,000 jobs were created from $42,000. A $27,000 grant to Shelton State Community College supposedly created 14,500 jobs (which is about $2 per job, or a job for approximately 3.5 Jack-in-the-Box tacos). (5) One lawnmower has even been claimed to have created 50 jobs, (I’ll leave it to you to figure out how that worked). (2)

The Southwest Georgia Community Action Council claimed it saved 935 jobs due to the stimulus package. Unfortunately, only 508 people work there. In another case, about two-thirds of the 14,506 jobs “saved” at the Administration for Children and Families at Health and Human Services were counted because they received pay raises. (6) Is a job really at risk of being lost if the person holding that job gets a raise? The answer, for anyone who’s ever worked in the private sector, is an obvious no. Indeed, the methodology behind these “created/saved” jobs is so absurd most 3^rd graders would probably just laugh at it.

Furthermore, the jobs the stimulus package has actually created don’t appear to last long. As David Goldman reports, “Of the nearly $500 billion in stimulus funds allocated to stimulus projects… $400 billion — will go to short-term contracts.” One good example is TeleTech, which:

“Over the course of [its] five-month contract, TeleTech hired and trained 4,231 people in call centers across nine states… The company began winding down the call-centers after June, and when the contract ended in August, all of the jobs that TeleTech created were terminated.” (7)

In addition, as Goldman writes, “Economists say that the majority of the jobs created by the stimulus projects are likely to end the way that the DTV call center positions [for Teletech] did, lasting only as long as the funding.” (7) Earl Devaney, the chairman of the Recovery Accountability and Transparency Board, even admitted to Congressman Darrell Issa, that “[you] ask if I am able to certify that the number of jobs reported as created/saved on Recovery.org is accurate and auditable. No, I am not able to make this certification.” (8)

It would seem everything about these job numbers is dubious in nature, even when it comes to simple matters of geography. For example, Recovery.org claims 30 jobs have been created in Arizona’s 15^th district. Just for the record, Arizona has eight districts. Arizona’s imaginary 15^th district joins imaginary districts in Oklahoma, Iowa, Connecticut, the Virgin Islands, Puerto Rico and the Northern Mariana Islands; all with the distinction of receiving real stimulus dollars. (9)

All this elucidates the fairly obvious point that the government cannot create anything itself. All the money the government has is from taxing, borrowing or printing. It can simply shuffle the deck. The jobs it creates are created by robbing capital from the more efficient private sector. Keynesian economists would argue government investment is needed to stimulate “unutilized resources.” They claim these resources aren’t being used because consumer demand has fallen, thereby the government must stimulate the resources back into use. The only problem with this assessment is that it is utter nonsense. The reason these resources aren’t being used is because they were poor investments in the first place; they need to be liquidated, not stimulated. We got into this whole mess because we overspent on housing and built too many housing units. Stimulating these resources would presumably require us to build even more houses. How would it help the economy to create an even bigger glut of vacant housing units?

The fallacy here is that Keynesians see the entire economy as a homogeneous blob of aggregate demand. In the real world, the economy is made up of many disparate parts. We were thrown way out of whack as an ungodly amount of money irrationally flowed into one part of our heterogeneous economy, namely housing. Right now, our economy needs to reallocate resources away from housing and thus, while these resources are reallocated we have a recession. Peter Schiff has a very good analogy to illustrate this:

“When the circus arrives, its performers and the crowds it attracts patronize local businesses. Now suppose a restaurant owner mistakenly concludes that this boom will endure and responds by building an addition. As soon as the circus leaves town, he finds he has tragically miscalculated. Does it make sense to inflate this poor businessman’s way out of his predicament? Creating new money doesn’t create any new stuff, so lending him newly created money merely allows him to draw more of the economy’s resource pool to himself, at the expense of genuine businesses that cater to real consumer wishes. This restaurant is a bubble activity that can survive only under the phony conditions of the circus boom. It needs to come to an end so that the resources it employs can be reallocated to more sensible lines of production.” (10)

But let’s assume Peter Schiff, myself, and common sense is all wrong. Let’s say the job numbers are completely accurate; has it been a good investment? According to Recovery.org, $218.1 billion has been doled out in entitlements, targeted tax breaks and contracts. It has produced 640,000 jobs (mostly entry level), or just over $340,000 a job. Now this is a simplistic calculation and some of the spent money has not yet had its full effect. Still, think back to when Obama proposed the stimulus package. He claimed it would create or save 3.3 to 4.1 million jobs. (11) At best, that’s $187,800 a job; nothing to laugh at, but nothing incredible either. And that is the best-case scenario outlined by the government, which is notorious for making bogus predictions.

So basically, this all boils down to the government making stuff up. Well, two can play at that game. In fact, according to my own calculations, SwiftEconomics.com has created/saved 25 million jobs just in the last quarter. Sure, they’re temporary jobs in nonexistent districts that don’t actually pay “money.” Admittedly, those who have gotten these SwiftEconomics jobs don’t even know they have them. But believe me, they are jobs, nonetheless. My contact information is listed under my profile if you would like to email me your thanks. I accept donations as well.

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(1) Recovery.gov, Retrieved November 24, 2009, http://www.recovery.gov/Pages/home.aspx
(2) “Oh brother… Obama Now Claims he’s “Created or Saved One Million Jobs”,” retrieved November 24, 2009, http://www.youtube.com/watch?v=nDxwL-8Hii4&feature=player_embedded
(3) Jim Holt, “White House “Created or Saved” a Million Jobs & Lost 3.3 Million Since Stimulus Passed,” Gateway Pundit, October 30, 2009, http://gatewaypundit.firstthings.com/2009/10/bs-alert-white-house-claims-stimulus-created-or-saved-a-million-jobs/
(4) See Anthony Mirhaydari, “True unemployment rate already 20%,” MSN Money, July 6, 2009, http://blogs.moneycentral.msn.com/topstocks/archive/2009/07/06/true-unemployment-rate-already-at-20.aspx
(5) Recovery Accountability and Transparency Board memo, Recovery Accountability and Transparency Board, October 30, 2009, http://abcnews.go.com/images/Business/OMB%20stimulus%2011%2015%2009.pdf
(6) Brett J. Blackledge and Matt Apuzzo, “STIMULUS WATCH: Salary raise counted as saved job,” Associated Press, November 4, 2009, http://www.google.com/hostednews/ap/article/ALeqM5jMNoef6xDenBbHWO0Im6rIjDmAgAD9BOJH300
(7) David Goldman, “Why stimulus jobs aren’t here to stay,” CNN Money, November 3, 2009, http://money.cnn.com/2009/11/02/news/economy/stimulus_jobs_dtv/index.htm?postversion=2009110215
(8) Earl E. Devaney, Letter to Congressman Issa, Pg. 1, November 17, 2009, http://a.abcnews.go.com/images/Politics/Devaney_Response_to_Issa_Letter_Recovery_Gov_Reporting.pdf
(9) Jonathan Karl, “Exclusive: Jobs ‘Saved or Created’ in Congressional Districts That Don’t Exist,” ABC News, November 16, 2009, http://abcnews.go.com/Politics/jobs-saved-created-congressional-districts-exist/story?id=9097853
(10) This quote is taken from Thomas E. Woods who is paraphrasing Peter Schiff. Tom Woods, “Unnatural Disaster,” The American Conservative, March 9, 2009, http://www.amconmag.com/article/2009/mar/09/00012/
(11) Charles Scaliger, “Obama’s Stimulus Plan Will Cost at Least $187,800 Per Job,” The New American, January 13, 2009,http://www.thenewamerican.com/economy/commentary-mainmenu-43/674