Thursday, February 25, 2010

The Wrong Debate On The Stimulus

The other day, I mentioned that the question of whether the stimulus worked is stupid. Of course, it worked. When you spend money you are going to stimulate the economy.

The real issue is cost effectiveness. The stimulus cost $787 billion. The administration claims that it will have saved 3.5 million jobs in total. So, by the administration's own numbers that is $224,857.14 per job saved.*

Not exactly what I'd call success.

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* The straight division isn't exactly fair because the stimulus included other things, but then I'd argue it wasn't actually a stimulus to save jobs but an excuse to enact liberal spending priorities.

2 comments:

George Pal said...

First thing comes to mind?

University of East Anglia has outsourced their climate research and have taken up nobbling Congressional Budget Office data. The math is settled.

Anonymous said...

Was the stimulus a success? Not according to Obama's own definition of what his stimulus was *going* to do. From TheNYTimes:

By JEFF ZELENY and DAVID M. HERSZENHORN
Published: January 10, 2009

WASHINGTON — One day after the nation’s unemployment rate was reported to be at a 16-year high, President-elect Barack Obama on Saturday again raised the estimate of how many jobs would result from his economic recovery plan, saying it would create or save three million to four million, *nearly 90 percent of them* in *the private sector*.

From the Wash.Examiner, February 8, 2010:

White House apologists were quick to point to the unemployment rate decline from 10 percent to 9.7 percent as evidence that the recovery is gathering momentum and that President Obama's policies -- especially his $787 billion economic stimulus bill Congress approved last February -- are "working." But the back story behind the figures provides cold comfort.
First, the drop to 9.7 percent unemployment does not reflect the creation of new jobs that normally accompanies an economic recovery. The number of new jobs is actually declining. Total nonfarm payroll employment, for example, dipped by an additional 20,000 positions after a December decline of 150,000 positions. The unemployment rate the day Obama took office last year stood at 7.6 percent and 134.6 million people had jobs. When he signed the economic stimulus, Obama promised the bill would bolster the economy sufficiently to keep unemployment below 8.0 percent. But the unemployment rate has exceeded 8.0 percent since last fall, and total employment stands at only 129.5 million. The stimulus has been a bust.
Second, anybody who thinks the job situation is going to improve dramatically in coming months is not paying attention to what's going on behind the unemployment rate.The Hudson Institute's Diana Furchtgott-Roth notes that “This is a better employment report than last month’s report, yet the economy is still not creating jobs. The percent of the unemployed who are out of work for 27 weeks or more exceeded 41%, an all-time high. This is unacceptable and shows that Congress and the President need to focus on job creation, rather than on expanding government, because the tax increases and borrowing used to expand government reduce overall job creation and create uncertainty." Furchtgott-Roth further notes that "the labor force participation rate is the lowest since mid-1985." This means that fewer Americans are in the labor force.
Third, among the few sectors of the economy showing net employment growth over the past year is the federal government. The federal civil service is rapidly expanding as Obama increases the size of government, with 33,000 new positions being added in January alone. Only 9,000 of those new slots were for temporary census jobs. In other words, what we are seeing is good times for the public sector and the growing prospect of a continuing and perhaps even deepening recession for everybody else.

If O is content to claim he successfully stimulated the economy, then yes he stimulated the economy -not successfully- because but he could have achieved the same amount of stimulation with a lot less money.

Mrs. P

 
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