Politics & Policy

Saved, Created, or Fake?

Stimulus errors stem from an underlying fraud

Ed Pound sounded like a man besieged. For weeks, newspapers across the country had been finding exaggerations and errors in stimulus recipients’ estimates of how many jobs their government checks had created or saved. The latest blow to the administration’s credibility was a report that dozens of recipients had misidentified their congressional districts, leading to claims that jobs had been created or saved in places such as the nonexistent 45th district of Louisiana. Asked by the New Orleans Times Picayune how so many stimulus recipients could get something so basic so wrong, Pound — the communications director for the Recovery Accountability and Transparency Board — replied, “Who knows, man, who really knows?”

It’s hard to blame Pound for sounding exasperated. He makes a valid point: Who knows why a recipient of millions of taxpayer dollars would put a random number on a mandatory government form? It’s carelessness that borders on contempt, and it’s got to be frustrating for the guy in charge of explaining it. It’s not just the phantom congressional districts, either. It’s the nonprofit in Georgia that counted raises for its employees as “jobs created.” It’s the university system in California that labeled over half of its workforce as “jobs saved.” The Washington Examiner tabulated stories like these and concluded that approximately 10 percent of the jobs reported as “created or saved” on Recovery.gov were “doubtful or imaginary.”

After I blogged about Pound’s comments on NRO’s The Corner, he sent me an e-mail asking me to call him if I had any questions. I took him up on the offer and asked him this: Has the Recovery Board — which runs Recovery.gov — thought about scrapping the concept of jobs created or saved? It seems to be the source of a lot of these reporting errors.

The short answer, according to Pound, is that the Recovery Board doesn’t have a say. Section 1512 of the stimulus bill requires stimulus recipients to provide “an estimate of the number of jobs created and the number of jobs retained by the project or activity,” and the Office of Management and Budget drew up the guidelines for stimulus recipients on how to calculate that number. (The non-profit in Georgia that counted raises as jobs stated that it was following these guidelines.) In other words, the Recovery Board is legally required to produce the “jobs created or saved” metric that has generated so much embarrassing press.

But setting that aside, there remains a serious debate over whether the stimulus has created or saved any jobs at all. As I noted in the latest issue of National Review, well-respected economists such as Eugene Fama and Bradford Cornell have argued that stimulus spending does not create jobs; it just shifts economic resources around. In the context of this debate, the “Jobs Created/Saved” counter on the front page of Recovery.gov seems less an exercise in transparency than an advertising ploy. Is this graphic appropriate?

Pound says, “We’re trying not to get into that argument. We’re trying to do our jobs here, which is provide transparency so people can see what’s happening with their money, and, on the accountability side, try to make sure that money is not wasted.” Pound points out that Recovery Board referrals have contributed to 77 criminal investigations and over 400 audits on potentially improper uses of stimulus money.

This is all to the good, but transparency and accountability could be achieved without manufacturing phony “jobs created or saved” numbers. Just show us who got how much for doing what.

The jobs metric is necessary for only two reasons. One, the administration sold the stimulus as a jobs package and promised that it would create 3 to 4 million new jobs. And two, the real measure of the stimulus’s effectiveness — the unemployment rate — has put Obama in a difficult spot. At 10.2 percent, it is over a full point higher than his economic team predicted it would be without the stimulus.

So the need to come up with a specific number of jobs created or saved is even more important than it was before. The fraudulent nature of that metric necessarily means more phony job reports, more headlines questioning the integrity of the data — and more headaches for Ed Pound.

– Stephen Spruiell is an NRO staff reporter.

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