"650,000 Jobs Saved or Created!" - Really?

This afternoon, the Obama Administration will release their second batch of “stimulus” data.  According to an Administration statement this morning, the roughly $150 billion spent so far will have directly “saved or created” 650,000 jobs.  However, factoring in “indirectly saved/created jobs,” they will be taking credit for roughly one million jobs allegedly saved or created through the trillion dollar spending and debt package.

There are many problems with the White House claims. Let’s start with just the top ones:

• The economy continues to shed jobs. The Administration’s economists claimed that passage of the package would keep the unemployment rate at about 8 percent.  Since the passage of the “stimulus,” however, more than 2.7 million jobs have been lost, as early October data showed. Any job numbers touted by the Administration will have to be seen against this background.
   
• “Indirectly” saving/creating jobs. The White House’s “indirect” job creation number is taking their bogus metric of counting “jobs saved/created” to a whole new level. One can indirectly claim credit for anything. Buy a lot of hamburgers? You personally “indirectly saved or created” five jobs at McDonalds.
   
• “Saved/created” metric will overstate impact. Leaving “indirect” job creation aside, the “saved/created” metric is so utterly flawed (as even President Obama’s chief economist Christina Romer admitted saying:  “It’s very hard to say exactly because you don’t know what the baseline is, right, because you don’t know what the economy would have done without it.” ) So even if they scrubbed the data for three weeks to prevent the massive errors found in the first batch of data, the numbers will be highly inflated because the underlying premise is flawed.
  
  
• Saving/creating government jobs.   The data will show that the bulk of the jobs “saved/created” are government jobs - mostly jobs in the unproductive sector of the economy, furthering no economic growth, and preventing necessary streamlining of an already bloated bureaucracy.  Ultimately, the package is propping up government at the expense of taxpayers.
   
• Strings attached only aggravate the problem.  State and local governments are beginning to feel the strings attached to the federal “stimulus” dollars.  Several provisions in the “stimulus” package prevent lawmakers from making certain budget cuts or adjustments that would alleviate fiscal strain. In the case of Washington state, the "maintenance of effort" provisions in the Recovery Act prevent the state from adopting eligibility standards for Medicaid that are more restrictive than those in effect on July 1, 2008, and education budget reduction restrictions also apply. Most states failed to quantify the restrictions. The likely result as states work to fix their budget problems: tax increases which will further depress economic growth and kill jobs.
   
• Taxpayers pay steep price. Even if you were to grant the Administration the 650,000 jobs created – using the roughly $150 billion figure of “stimulus” funds spent, the cost per job “created/saved” would come out to more than $230,000.   Not exactly a bargain.

Permalink | Email | Print | Tags: CONGRESS, SPENDING, OBAMA, STIMULUS, CFA

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