The White House Council of Economic Advisors released a report stating that the stimulus package saved or created 2.4 million jobs. This sounds great, but The Weekly Standard—not a paper I’m particularly fond of—actually did the math on that:$666 billion spent so far 2.4 million jobs ____________ = $278,000/job
Not very impressive indeed. Or as the The Weekly Standard put it:
In other words, the government could simply have cut a $100,000 check to everyone whose employment was allegedly made possible by the “stimulus,” and taxpayers would have come out $427 billion ahead.
The Obama Administration took offense to this and White House spokesman Jay Carney responded:
Thanks to the Recovery Act, 110 million working families received a tax cut through the Making Work Pay tax credit. Over 110,000 small businesses received critical access to capital through $27 billion in small business loans. And more than 75,000 projects were started nationwide to improve our infrastructure, jump-start emerging industries and spur local economic development.
And you can do a lot of creative math and come up with an outcome that supports a particular editorial point of view, but the fact is the non-partisan Congressional Budget Office has confirmed that the Recovery Act delivered as promised, lowering the unemployment rate by as much as 2%, boosting the GDP significantly and creating and saving as many as 3.6 million jobs. We concur with that non-partisan analysis.
There are a whole host of problems with this. The Making Work Pay tax credit has only cost $89.3 billion so far, so adding that to the $27 billion in small business loans only chips the total down to about $550 billion (about $229,000 per job). Even then, why aren’t those tax cuts and small business loans “saving or creating jobs.” Second, the Congressional Budget Office is not the end all of economic predictions (as useless as economic predictions often are). The CBO has a history of being wrong about almost everything, for example here’s there projection of Federal Revenues vs. Outlays:
Indeed, unemployment quickly surpassed the 8% level Obama said the stimulus package would keep us below (it even exceeded what they thought would happen if there was no stimulus package). Furthermore, other economists, such as Robert Barro and John Taylor concluded that the stimulus package didn’t do anything but add on a bunch of debt. Temporary changes in income rarely affect consumption and public borrowing (to finance the stimulus package) can crowd out the private sector.
And what exactly is a “saved job” anyways. As I’ve shown before, it’s often just smoke and mirrors. Here’s just one example:
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).
Even Obama admitted that there’s “no such thing as a shovel-ready project.” Of course that was after passing the stimulus package with the promise of a bunch of shovel-ready projects.
The evidence seems pretty overwhelming; the stimulus package was a failure.
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