THREE MILLION IMAGINARY JOBS
July 15, 2010
It may be that the last people in America who believe that the $862 billion economic stimulus of February 2009 created millions of net new jobs are Vice President Joe Biden and the staff economists in the White House. Yesterday, President Obama's chief economist announced that the plan had "created or saved" between 2.5 million and 3.6 million jobs and raised gross domestic product (GDP) by 2.7 percent to 3.2 percent through June 30.
Christina Romer went so far as to claim that the 3.5 million new jobs that she promised while the stimulus was being debated in Congress will arrive "two quarters earlier than anticipated." The official White House line is that the plan is working better than even they had hoped.
- Since February 2009 the U.S. economy has lost a net 2.35 million jobs.
- Using the White House "created or saved" measure means that even if there were only three million Americans left with jobs today, the White House could claim that everyone was saved by the stimulus, says the Wall Street Journal.
The White House also naturally insists that things would be much worse without the stimulus billions spent on the likes of Medicaid payments, high speed rail projects, unemployment benefits and windmills. President Obama said recently in Racine, Wisconsin, that the economy "would have been a lot worse" and the unemployment rate would have gone to "12 or 13, or 15 [percent]" if government hadn't spent all of that money.
This is called a counterfactual: a what would have happened scenario that can't be refuted. What we do know is what White House economists at the time said would happen if the stimulus didn't pass, says the Journal:
- They said the unemployment rate would peak at 9 percent without the stimulus (there's your counterfactual) and that with the stimulus the rate would stay at 8 percent or below.
- In other words, today there are 700,000 fewer jobs than Romer predicted we would have if we had done nothing at all.
If this is a job creation success, what does failure look like, asks the Journal?
Source: Editorial, "Three Million Imaginary Jobs," Wall Street Journal, July 15, 2010.
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