Figures don’t lie. But politicians are another story.
Last week, Vice President Joe Biden declared the stimulus
legislation a success. In Biden’s latest report on the American
Recovery and Reinvestment Act of February 2009, the Vice President
boasts that it is on schedule to meet the goal of creating or
“saving” 3.5 million jobs at a price tag of $787 billion. The
Washington Post fell for it,
saying Biden’s “report challenges public perceptions of
the stimulus aid as slow-moving and wasteful.” Not if you do the
arithmetic. It works out to slightly less than $250,000 of
taxpayers’ money for each job created — and most of the jobs are
temporary. That’s the definition of wasteful.
It gets worse. The goal is 3.5 million jobs, but the
actual data substantiate far fewer jobs created, and point to grave
problems in 2012, when the stimulus spending stops. About one fifth
of the stimulus money spent so far has gone for a variety of
projects such as expanding broadband, replacing road signs,
construction, highway maintenance, research, and weatherizing
buildings. The law makes recipients of these stimulus grants report
how many jobs are being funded. These reports are the only actual
evidence linking stimulus funding to jobs — and they show 749,142
jobs as of June 2010, according to the Congressional Budget Office.
Some jobs may have existed anyway, and some jobs created indirectly
by the projects, such as a supplier adding employees, are not
counted.
Still, it’s a far cry from 3.5 million. The Biden report
claims that “in August 2010 the non- partisan CBO determined that
the Recovery Act has raised employment by up to 3.3 million jobs.”
That is not what the CBO said. The CBO could not “determine” such a
thing, because the data do not exist.
Instead, the CBO called on economists who claim government
spending can produce recovery and job growth to guesstimate, using
their own theories and models, what the stimulus spending might
yield in jobs. These true believers’ guesstimates ranged from 1.4
million to 3.3 million more jobs in 2010 than if the law had not
passed (with a cost per job of between $167, 000 and
$393,000).
Economists who doubt that government spending can turn
around a recession — and there are many who challenge that
Keynesian notion — were not invited to the party. If they had
been, the range of guesstimates probably would have started with a
negative number, suggesting jobs lost because of a delayed
recovery. These economists say FDR’s spending programs did nothing
to produce recovery during the Great Depression and lament that the
Obama administration is making the same mistake. But what is
important to know is that the claim that millions of jobs are being
created is based on theoretical models (from one side of the
argument), not real data.
What is real is the coming crisis facing many state and
local governments. More than a third of the stimulus money spent
thus far has gone to state and local governments. Some funds are
used to expand Medicaid, unemployment benefits, and food
assistance, while others are propping up state workforces and
avoiding public school layoffs. The stimulus funds are enabling
spending-addicted politicians in states such as New York to avoid
trimming budgets in response to lower tax revenues.
Unfortunately the Biden report treats public and private
jobs the same. But not all jobs are created equal. Private sector
jobs make wealth. Public sector jobs consume it, taking money out
of our pockets that we could spend on our own families. Since the
recession began, the nation has lost millions of private sector
jobs, but added public jobs. The stimulus law is worsening that
pernicious trend.
The CBO’s panel of true believers speculates that in 2012,
the stimulus funds will be responsible for only 300,000 to one
million more jobs than if the law had not passed. In other words,
most effects of the law will be gone. So will your money, all $787
billion.
Betsy McCaughey is a former Lt. Governor of
New York State. Vice President Biden’s report is not yet available
to the public, but the Recovery office says it will be in 48 hours.
(This author got a copy from a
Washington Post
reporter.)
