The White House’s pushback on the stimulus cost-per-job-created figure is, er, not as persuasive as they would like:
House Speaker John Boehner, R-Ohio, is just the latest Republican to be publicizing a Weekly Standard report claiming that President Obama’s own economists claim the stimulus bill cost $278,000 per job…
The White House has long disputed the math of dividing the cost of the stimulus by the number of jobs created – we asked a similar question back in October 2009, when that computation resulted in the comparable bargain of $72,408 per stimulus job, as you can read at this blog post.
Then, as now, White House officials note that the spending didn’t just fund salaries, it also went to the actual costs of building things — construction materials, new factories, and such. So the math is flawed, White House officials say, since reporters are not including the permanent infrastructure in the computation, thus producing an inflated figure. White House officials also questioned why the Weekly Standard would use the lower figure from the projection of the number of jobs created, and noted that the temporary nature of the stimulus bill meant that its impact would diminish over time, when the private sector began hiring again. In other words, the number of jobs created at its peak – as many as 3.6 million, according to the Congressional Budget Office’s May 2011 report – would be more appropriate, White House officials say.
Okay, fine. Let’s use the high-end 3.6 million jobs-created figure. That still comes out to $185,000 per job.
As for the notion that because the stimulus was temporary, we shouldn’t be surprised that its impact diminishes over time, that’s refuting a point no one made. More troubling for stimulus defenders is the idea that the CBO report puts the majority of the stimulus’ impact in 2010, when the unemployment rate began the year at 9.7 percent, peaked at 9.9 percent in April, and ended the year at 9.4 percent. In other words, even when the stimulus was at peak efficacy, it had minimal impact on the national unemployment rate.
Also note that the White House does some convenient rounding of their own. In their defense, they state, “The nonpartisan CBO has confirmed that the Recovery Act delivered as promised, lowering the unemployment rate by as much as 2 percent, boosting GDP by as much as 4 percent and creating and saving as many as 3.6 million jobs.”
Actually, that stretches what the CBO actually said. Their report puts the maximum impact on the unemployment rate at 1.8 percent and as low as .6 percent, and that it boosted “(inflation-adjusted) gross domestic product (GDP) by between 1.1 percent and 3.1 percent.”
The purpose of the stimulus was to create jobs. Remember Biden's 3-letter word: J-O-B-S? It was not to build bridges per se, so using the division of stimulus dollars by job is a reasonable way of measuring the impact of the less-than-stimulating stimulus.
Reply to this commentLinkReport AbuseJust a passing thought. The 80s had the $600 toilet seats and roaring job growth. The 21st century now has the $185,000/job program and no job growth. I'd submit we were better off when our government provided toilet seats were $600.
Reply to this commentLinkReport AbuseI kind of like the tossed-in clause "at its peak." It illustrates nicely the difference between genuine job growth- created by long-term private sector investment - ad government demand-side "stimulus," which cannot be sustained indefinitely and is therefore subject to a "peak" jobs-created number. Even at $185K a pop, we can't create lasting, value-creating employment through government spending; only temporary, make-work ephemera. They should not get credit for "peak" job stimulus; if it can't be sustained, it ain't helping.
Reply to this commentLinkReport AbuseI'm no math major, but isn't Obama crowing that he spent about 6% of GDP on the stimulus ($850B out of a $14T GDP) to achieve additional 1-3% growth? Granted, probably all of the stimulus wasn't spent, but even if we spent 3% of GDP to achieve an additional 3% of growth shows that government spending has little or no multiplier effect.
Reply to this commentLinkReport AbuseI'm no math major, but isn't Obama crowing that he spent about 6% of GDP on the stimulus ($850B out of a $14T GDP) to achieve additional 1-3% growth? Granted, probably all of the stimulus wasn't spent, but even if we spent 3% of GDP to achieve an additional 3% of growth shows that government spending has little or no multiplier effect.
Reply to this commentLinkReport AbuseIt is clear that you want to create statistics to discredit the Stimulus. But to get a meaningful figure we need to actually look at the number of direct and indirect hires from the portion of the stimulus targeted for that - $211 Billion. This is the only number that can be fairly used to calculate a price per job. Maybe the number is higher or lower, but this is a number worth discussing. Furthermore we are talking about two years of jobs, not one. And it is absolutely true that in the reconstruction of roads and such a chunk of the money is in supplies and overhead. So let's be honest instead of ideologues.
A different analysis that would be interesting is how much private hiring and increased tax revenues were the result of the $240 Billion of the stimulus' tax cuts? In other words, how well did that part of the stimulus work?
And finally the 3rd area of Medicaid, unemployment and family aid of about $170 Billion was money sorely needed by our countrymen to help ease the pain of a horrible economic collapse. If this had been passed as a separate bill the number would never even enter this conversation.
Reply to this commentLinkReport AbuseHate to point this out to you, but by the Executive Branch's own statistics, the stimulus was a failure. When the unemployment rate(Actual) ends up being higher then unemployment rate(Without Stimulus) and far higher than the unemployment rate(With Stimulus) touted by President Obama as what we would get...The stimulus has failed to achieve one of its main goals.
All that money that supposedly helps Americans are not doing anything if they are sitting in a federal account, waiting for the 'shovel-ready project' to actually be shovel-ready and start working. Note the administration has admitted failure on this point.
And you overlook the huge cost in borrowing and interest payments, let alone possible tax increases, needed to pay for said stimulus, which could be gainfully employed elsewhere...
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