The White House is in a disagreement with Jeffrey Anderson of The Weekly Standard over how much jobs “created or saved” by the stimulus bill cost. Anderson wrote that, based on the White House’s own estimates, each job created or saved cost taxpayers $278,000. The math is simple: so far, there’s been $666 bilion in stimulus spending, and 2.4 million jobs created or saved, per the Council of Economic Advisers’ estimates. That’s $278k per job.
The White House fired back, according to Jake Tapper, by saying that Anderson’s “math is flawed,” because he didn’t take into account that “the spending didn’t just fund salaries, it also went to the actual costs of building things — construction materials, new factories, and such.”
In a response, Anderson pointed out that he wasn’t talking about salaries, but the cost per job to taxpayers. Anderson also fielded a few other lame criticisms from the White House. I call this one for Anderson.
The point of the exercise, though, is not only that each job created by the stimulus was too expensive (although surely that’s true), but that neither the administration nor anyone else has given reliable, accurate estimates of how many jobs were created or saved. Anderson’s math (read his whole post) shows just how arbitrary many of the administration’s claims are.
To illustrate that fact in a different way, take the estimates of the stimulus bill most favorable to the White House. White House spokeswoman Liz Ozhorn cites the Congressional Budget Office’s upper range of 3.6 million jobs created or saved. The administration’s claim is that, without the stimulus, those 3.6 million people would not have jobs today. Let’s assume, then, for the sake of argument, that without the stimulus, those people would be technically unemployed. Instead of 13.9 million unemployed people today, there would be 17.5 million. Instead of a 9.1 percent unemployment rate, it would be 11.4 percent. In 2009, before the passage of the stimulus bill, incoming CEA chair Christina Romer predicted that the unemployment rate would be about 8 percent in mid-2011 without the stimulus.
In other words, using the estimate of the stimulus most favorable to the administration, and cited by its spokeswoman, the administration’s original prediction of what the unemployment rate would be without the stimulus was off by 3.4 percentage points. Do they really feel confident now guessing the number of jobs created by the stimulus to the nearest thousand?
To put that error of 3.4 percentage points in context, the total unemployment rate in May of 2007 was 4.4 percent.