Pushing back against a claim by Speaker John Boehner, who recently cited numbers from the Weekly Standard noting that the so-called stimulus cost $278,000 per job, economic advisors from the Obama Administration want to set the record straight:
The Council of Economic Advisers report, issued last Friday, states that in the first quarter of 2011, the stimulus bill “has raised employment relative to what it otherwise would have been by between 2.4 and 3.6 million.”
The White House has long disputed the math of dividing the cost of the stimulus by the number of jobs created – we asked a similar question back in October 2009, when that computation resulted in the comparable bargain of $72,408 per stimulus job, as you can read at this blog post.
Then, as now, White House officials note that the spending didn’t just fund salaries, it also went to the actual costs of building things — construction materials, new factories, and such. So the math is flawed, White House officials say, since reporters are not including the permanent infrastructure in the computation, thus producing an inflated figure. White House officials also questioned why the Weekly Standard would use the lower figure from the projection of the number of jobs created, and noted that the temporary nature of the stimulus bill meant that its impact would diminish over time, when the private sector began hiring again. In other words, the number of jobs created at its peak – as many as 3.6 million, according to the Congressional Budget Office’s May 2011 report – would be more appropriate, White House officials say.
Jim Geraghty notes that even if the higher figure of jobs created were used, the stimulus would still have cost $185,000 per job.
Some may take issue with the math, but unlike the private sector, we’re dealing with an entity that pulls money out of the economy; money that could have been invested or borrowed in the private sector and put to better use.
The Obama Administration has taken credit for saving the economy by spending an arbitrary amount of money while at the same time claiming that if we had done nothing the economy would have been so much worse off. This counterfactual claim has been called out by others. Obama had largely rested in the fact that had the stimulus been unsuccessful, he could have just said it wasn’t large enough.
But in the two and a half years since the stimulus was passed, the economy has produced barely enough jobs to keep up with population growth and many businesses are sitting on whatever profits they reap. Why? Because there is still a lot of uncertainity in the economy, some of which is a direct response to President Barack Obama’s policies.
The only way to get the economy moving is to stop pursuing policies that place hurdles in the way of economic growth. Until Obama does that, we’re not going to see real prosperity.