Lies And Spin! Stimulus Style! UPDATE!
Compliments of the Weekly Standard, which, apparently, doesn’t seem to have any standards.
Concerning a new report issued by the White House on the dreaded ARRA stimulus package of 2009, they write:
When the Obama administration releases a report on the Friday before a long weekend, it’s clearly not trying to draw attention to the report’s contents. Sure enough, the “Seventh Quarterly Report” on the economic impact of the “stimulus,” released on Friday, July 1, provides further evidence that President Obama’s economic “stimulus” did very little, if anything, to stimulate the economy, and a whole lot to stimulate the debt.
??? Is that really what it says???? We’ll tackle that in a moment.
The report was written by the White House’s Council of Economic Advisors, a group of three economists who were all handpicked by Obama, and it chronicles the alleged success of the “stimulus” in adding or saving jobs. The council reports that, using “mainstream estimates of economic multipliers for the effects of fiscal stimulus” (which it describes as a “natural way to estimate the effects of” the legislation), the “stimulus” has added or saved just under 2.4 million jobs — whether private or public — at a cost (to date) of $666 billion. That’s a cost to taxpayers of $278,000 per job.
(A) OK, just under 2.4 million jobs is not the “over 3 million” Obama had been touting while justifying the stimulus, but… it’s still 2.4 million jobs that were there, helped or created by the stimulus. How many non-stimulus jobs were created by normal capitalist processes during this period? Judging from the rise in the unemployment numbers during the same period, I can guess the normal jobs creation numbers were in the negative.
(B) “That’s a cost to taxpayers of $278,000 per job.”??? Seeing that some of the stimulus package were tax cuts, about a third I believe, and since tax cuts don’t count against deficit numbers (unless a Democrat passes it) wouldn’t the real number be something like $183,000 per job. Still less efficient in jobs creation cost than the private sector can do, but the value on the economy of a person having a job versus one that doesn’t can not be under-estimated.
In other words, the government could simply have cut a $100,000 check to everyone whose employment was allegedly made possible by the “stimulus,” and taxpayers would have come out $427 billion ahead.
Uhm… But I thought welfare was bad?????
Furthermore, the council reports that, as of two quarters ago, the “stimulus” had added or saved just under 2.7 million jobs — or 288,000 more than it has now. In other words, over the past six months, the economy would have added or saved more jobs without the “stimulus” than it has with it. In comparison to how things would otherwise have been, the “stimulus” has been working in reverse over the past six months, causing the economy to shed jobs.
What???? Does the writer have a crystal ball??? Mr. Anderson (thank you Matrix for putting Hugo Weaving’s voice in my head when I think of the name “Mr. Anderson”) provides no evidence at all that business would have stopped firing people and hire 2.8 million if the stimulus would not have been passed. Now, if the Obama stimulus package would have significantly raised taxes to pay for itself, as FDR’s New Deal did, then you could make the claim that the stimulus hurt growth of free market job opportunities. But since the stimulus included tax cuts for employees and small businesses, and the Bush era tax cuts are still in place, there is simply no real economic basis for his claim, only a political partisan one.
Mr. Anderson then writes this:
Again, this is the verdict of Obama’s own Council of Economic Advisors, which is about as much of a home-field ruling as anyone could ever ask for.
In the previous statements, Mr. Anderson was being speculative. Here, he is flat out lying! The C. O. A. DOES NOT agree that the stimulus has been working in reverse. Here is what they say:
In light of the actual behavior of GDP, the estimates in Table 7 suggest that most
forecasters believe that, in the absence of the Act, GDP would have declined sharply in 2009:Q2
and continued to decline in 2009:Q3, and that growth would have been considerably weaker in
subsequent quarters than it actually was. Likewise, the estimates in Table 8 imply that most
forecasters believe that jobs losses would have moderated much more slowly than they actually
did over the course of 2009, and that substantial job losses would have continued into 2010.
Nothing in that statement reads “reverse”.
And in the conclusion:
The analysis indicates that the Recovery Act has played a significant role in the turnaround of the economy that has occurred over the past two years.
If the Weekly Standard is supposed to be a benchmark for good Conservative journalism, then it’s no wonder so many hold the conservative press as a whole in such contempt!
UPDATE: Here is a much better criticism of the ARRA. The key point:
As early as the summer of 2009 it was clear that ARRA was not working as intended, as John Cogan, Volker Wieland and I reported. Research since then has uncovered the reasons why. One reason is that very large stimulus grants to the states did not go to infrastructure spending as intended, and that’s what Ned Gramlich found out about Keynesian stimulus packages thirty years ago.
The author respectfully kicks Paul Krugman in the teeth for advocating an even larger stimulus package!
Economics, Politics / Law Stuff, Tortured Logic | Sonicfrog July 5, 2011
2 Comments to “Lies And Spin! Stimulus Style! UPDATE!”
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By The Last Bass Player, July 6, 2011 @ 4:33 pm
Hear! Hear! That Sonicfrog!
Though I’m halfway across the globe and don’t really have a say in it, I have to support Obama on behalf of sense everywhere.
And…wait, wait, wait. when you quote “at a cost (to date) of $666 billion” – is this the figure the conservative press have come up with? And is this figure backed up in any way? It just seems like a very provocative figure to this bass player… and perhaps typical of the oft-times hysterical conservative press (English or American).
‘No symbols where none intended,’ as Samuel Beckett wrote.
By Sonicfrog, July 6, 2011 @ 5:21 pm
First, I’m not an Obama supporter either. He’s pretty much useless when it comes to economic issues.
I don’t like the stimulus that was passed…. It was clumsy and poorly administered. That said, a stimulus bill enacted during a severe downturn has two effects:
1. It does act as a buffer against the downturn. With out it, there is no reason to expect, and in fact, no metric to show that this great recession would have less severe. Note that the WS provides no links to back their assertions. They are simply parroting political views disguised as economics.
2. The stimulus, because it is a buffer, probably does prolong the recovery. Why? Because it postpones the impending failure that awaits so many businesses that can’t survive without government subsidies. There are more than a few companies that were showcased by Obama personally in 2009 where the company was doing really well because of the stimulus, but dies as soon as the stimulus ended. But which would you rather have, a prolonged recession where unemployment is sluggish, or a massive economic depression, where all those jobs and businesses that were saved, albeit temporarily, all go out of business all at once, creating a much higher and sharper unemployment picture? And the stimulus delays the changes in the economic structure that our policy makers need to change to right the ship… because… passing a stimulus is just easier to do.
On principle, I don’t like the stimulus. Both choices of either doing it or not suck, but I’ll go with the one that is less sucky, a nasty recession over another Great Depression any day.