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Dumb and Dumber on Stimulus Jobs
There is a cottage industry developing among political reporters trying to investigate whether the Obama administration’s claims on jobs created or “saved” by the stimulus are true. For example, ABC’s intrepid White House reporter Jack Tapper said on his blog:
“DeSeve and Bernstein [Obama administration spokespeople] were not able to say how many of the 640,329 jobs were saved and how many were created. How do they know that government officials asking for stimulus funds to help prevent layoffs were legitimate?”
The Washington Post also got into the act with its own piece commenting on the administration's jobs figures that: "Republicans and government watchdogs questioned the reliability of the figures."
This is an exercise in extreme silliness. It will be almost impossible to identify the vast majority of jobs that are created or saved by the stimulus because this would require a full knowledge of the flow of spending from tens of thousands of governmental units and the consumption decisions of 150 million households. However, there are fairly well-recognized economic relationships (outside of the University of Chicago) that allow the administration to produce reasonably good estimates of the number of jobs created or saved by the stimulus.
The administration is not using any hocus pocus in producing these job numbers. It is simply applying rules of thumbs that have been used by both Democratic and Republican administrations as well as impartial bodies like the Congressional Budget Office. If these reporters want to investigate the Obama administration's actions, their time would be much better spent looking at its ties to the financial industry where they could well be some substantive issues.
btw, any reporter who puts the word "saved" in quotes should be fired immediately. It reflects either ungodly stupidity or pathetic partisanship. Every month, 2 million workers are dismissed by their employer. If this number can be reduced by just one-tenth, then net job creation will be increased by 200,000 a month or 2.4 million a year. Anyone who implies that there is something peculiar about efforts to reduce the numbers of jobs lost by "saving" jobs is badly misleading readers.
--Dean Baker
COMMENTS (11)
the reason "saved" is in parenthesis is because it's hard to believe that borrowing money from the future or taking money from other people to pay to someone else "saves" any net jobs.
Posted by: jh | October 31, 2009 12:21 PM
No, JH, it isn't. I'm trying to be polite, but jeez louise ... go read some Keynes if you're having a hard time understanding how government spending can save net jobs.
Posted by: Alex | October 31, 2009 6:15 PM
Hi JH:
Also it is not possible to borrow money from the future since the future doesn't yet exist. What CAN happen is that the government can borrow from the present and pay back the debt in the future from the increased economic growth that results from the government making up for the collapse is aggregate demand.
Posted by: keith johnson | October 31, 2009 6:53 PM
Hi JH:
Also it is not possible to borrow money from the future since the future doesn't yet exist. What CAN happen is that the government can borrow from the present and pay back the debt in the future from the increased economic growth that results from the government making up for the collapse is aggregate demand.
Posted by: keith johnson | October 31, 2009 6:54 PM
They criticized the cash for clunkers program using similar reasoning. What the doubters don't seem to grasp is that economic events such as stimulus programs are vectors, not scalars. They have quantity and direction. They also occur within specific sequences of events. So it's a question of how much, at what pace and at what time. If an engine is stuck at top-dead-center (or bottom in this case), a small push over a long period of time won't budge it. It takes a large push in a short period of time. Even though the two do an equal amount of work, the first won't apply enough impulse to overcome inertia.
Posted by: Don Larsen | October 31, 2009 9:41 PM
How about a moratorium on welfare term limits as part of the recovery plan? I'm worried about those on TANF trying to compete from the tail end of the job queue as employment lags. (see http://www.familyinequality.com).
Posted by: Philip Cohen | November 2, 2009 11:02 AM
I don't remember hearing the phrase "number of jobs 'saved'" until this administration.
There is no way it can be quantified. They can claim more jobs would have been lost with out the stimulus bills, but they can't prove it with real numbers.
The use of this new phrase "jobs saved" is a deliberate attempt to deceive and trick people into believing that the the "stimulus" bills are actually helping.
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What the doubters don't seem to grasp is that economic events such as stimulus programs are vectors, not scalars.
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