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.
Of course, 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 1 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.
Vice President Biden's report is not yet available to the public, but the Recovery office says it will be in 48 hours. (I got a copy from a Washington Post reporter.)
Betsy McCaughey is a former lieutenant governor of New York State.
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