CBO report shows high-cost per stimulus job
President Barack Obama and Democrat have time and time again repeated the talking point that the $831 billion American Recovery and Reinvestment Act, passed in early 2009, helped save the economy, which was suffering the effects of a severe recession, and helped create jobs.
However, a new report from the Congressional Budget Office (CBO) via James Pethokoukis shows that the stimulus bill was largely wasteful considering its affects on unemployment, with a high cost for what jobs were created:
When [the American Recovery and Reinvestment Act] was being considered, the Congressional Budget Office (CBO) and the staff of the Joint Committee on Taxation estimated that it would increase budget deficits by $787 billion between fiscal years 2009 and 2019. CBO now estimates that the total impact over the 2009–2019 period will amount to about $831 billion.
By CBO’s estimate, close to half of that impact occurred in fiscal year 2010, and more than 90 percent of ARRA’s budgetary impact was realized by the end of March 2012. CBO has estimated the law’s impact on employment and economic output using evidence about the effects of previous similar policies and drawing on various mathematical models that represent the workings of the economy. …
On that basis CBO estimates that ARRA’s policies had the following effects in the first quarter of calendar year 2012 compared with what would have occurred otherwise:
– They raised real (inflation-adjusted) gross domestic product (GDP) by between 0.1 percent and 1.0 percent,
– They lowered the unemployment rate by between 0.1 percentage points and 0.8 percentage points,
– They increased the number of people employed by between 0.2 million and 1.5 million,
– They increased the number of full-time-equivalent jobs by 0.3 million to 1.9 million. (Increases in FTE jobs include shifts from part-time to full-time work or overtime and are thus generally larger than increases in the number of employed workers.)
Pethokoukis did the math and found that the “current cost-per-job created is somewhere between $4.1 million and $540,000” (the former being the worst number, the latter being the best case for the White House). Pethokoukis also points to the other economic impacts of the stimulus bill from the CBO report, which shows:
In contrast to its positive near-term macroeconomic effects, ARRA will reduce output slightly in the long run, CBO estimates—by between zero and 0.2 percent after 2016. But CBO expects that the legislation will have no long-term effects on employment because the U.S. economy will have a high rate of use of its labor resources in the long run. ARRA’s long-run impact on the economy will stem primarily from the resulting increase in government debt.
When the stimulus was passed, the White House claimed that unemployment would not rise above 8%. This was a fantasy and it shows the follies of Keynesian planning. Unemployment peaked during the recession at 10% in October 2009, and we’re just now starting to see it come back, and yet it’s still higher than the White House said it would be with the stimulus.
The recovery that Americans were promised has come at a much slower pace than after previous recessions. It’s almost like we’ve learned nothing from New Deal-style economic interventions, which prolonged and worsened the Great Depression.
Here we are, more than three years after passage of the stimulus bill. There is still a lot of uncertainty, businesses are wary of investing, and we have more debt and still-high deficits, but we’re constantly told that Congress needs to spend more money.