As Veronique notes, the Congressional Budget Office has released a new report on the stimulus (ARRA, American Recovery and Reinvestment Act), and Democrats are, predictably, citing the report as evidence that another round of stimulus is required in the form of the so-called jobs bill. That jobs bill has already found its way out of the Senate, with Scott Brown having blown his first big call in the big leagues. But the House version is about ten times the size of the Senate version — another terrifying hundred-billion-dollar slab of pork-a-palooza. Still, if the CBO says the stimulus works, then the stimulus works, right? So let’s hit it again!

The CBO report is, as usual, more carefully hedged than a paranoid commodities trader’s retirement fund. But a few things are worth noting:

The first is that, even if we take the CBO’s most generous interpretation of the stimulus and credit it with creating the equivalent of 2 million jobs, the price tag remains absurd: $136,000 per job. Given that these jobs are not likely to pay an average salary of anything like $136,000 per year, the government, the workers, and the taxpayers probably would have been better off if Uncle Sam had just written these workers $60,000 checks for two years. (The stimulus’s effects are expected to fade over the course of about 24 months, if they last that long.)

The second thing to consider is that the CBO takes two different approaches to counting up these jobs, both of them problematic. The first is the familiar technique of accepting job-counts from recipients of stimulus dollars. We all know how reliable those numbers have turned out to be. And even if those numbers were reliable, they’re not especially encouraging. CBO writes: “According to the recipients’ reports, a total of 595,263 full-time-equivalent jobs – more than two-thirds of them in education – were created or retained using ARRA funds during the fourth quarter. Those assistant vice principals and deputy diversity counselors are not creating much real economic value. The CBO report, to the authors’ credit, barely conceals its contempt for these recipient reports.

When it’s not taking somebody else’s word for it, the CBO uses a different approach, but it still isn’t going out and actually counting up jobs created by the stimulus. Instead, it’s using a couple of different mathematical and macroeconomic models. Good models or bad models? I couldn’t say, but I’m happy to give CBO the benefit of the doubt – as I am when it comes to the CBO’s own qualifications of its findings. For instance: “Because they emphasize the influence of aggregate demand on output in the short run, the macroeconometric forecasting models tend to predict greater economic effects from demand-enhancing policies such as ARRA than some other types of models do.” In other words, the stimulus is being measured with a yardstick custom-designed to maximize its estimate. The CBO is up front in acknowledging the limitations of its models; don’t count on congressional Democrats or Paul Krugman to be so scrupulous.

Lastly, the CBO acknowledges that stimulus spending has a crowding-out effect that inhibits private investment, thereby weakening the long-term health of the economy. How does that crowding-out work? Often through higher interest rates: “Higher interest rates,” CBO writes, “discourage spending on investment and on durable goods such as cars because they raise the cost of borrowed funds. However, that mechanism was not an important factor in 2009 because the Federal Reserve kept short-term interest rates very low.” Again, if we take the CBO at its word and offer the most generous interpretation, then the limited success the stimulus has had in creating jobs at $136,000 a pop rests, ultimately, on another Fed cheap-money bubble. And when interest rates start to rise? What happens then? Oh, we’ll worry about that when it … oh, yeah.