Stimulus: Goodbye “Saved or Created” Jobs
[Guest post by DRJ]
President Obama’s American Recovery and Reinvestment Act of 2009, more commonly known as the Stimulus, had three goals:
Create new jobs as well as save existing ones. Spur economic activity and invest in long-term economic growth. Foster unprecedented levels of accountability and transparency in government spending.
As of October 30, 2009, Recovery.gov showed 640,329 jobs “created or saved” by stimulus funds. However, the jobs listing has been shown to be inflated, highly suspect, and with no effect on unemployment:
“A federal spending surge of more than $20 billion for roads and bridges in President Barack Obama’s first stimulus has had no effect on local unemployment rates, raising questions about his argument for billions more to address an “urgent need to accelerate job growth.”
An Associated Press analysis of stimulus spending found that it didn’t matter if a lot of money was spent on highways or none at all: Local unemployment rates rose and fell regardless. And the stimulus spending only barely helped the beleaguered construction industry, the analysis showed.
With the nation’s unemployment rate at 10 percent and expected to rise, Obama wants a second stimulus bill from Congress including billions of additional dollars for roads and bridges — projects the president says are “at the heart of our effort to accelerate job growth.”
The government’s response? Change the goals so they no longer count jobs “created or saved”:
“In a little-noticed December 18, 2009 memo from Office of Management and Budget director Peter Orszag the Obama administration is changing the way stimulus jobs are counted.
The memo, first noted by ProPublica, says that those receiving stimulus funds no longer have to say whether a job has been saved or created.
“Instead, recipients will more easily and objectively report on jobs funded with Recovery Act dollars,” Orszag wrote.
In other words, if the project is being funded with stimulus dollars – even if the person worked at that company or organization before and will work the same place afterwards – that’s a stimulus job.”
At this rate, every job in America will be a Stimulus job by 2013.
— DRJ
in the meantime, the rest of America continues to say “good bye j*bs” as increased government spending warps the credit market, government regulation strangles existing businesses and stifles new ones, and our so called educational systems devalue initiative and mocks hard w*rk and useful skills and accentuates and rewards “diversity”….
we are *SO* screwed.
redc1c4 (fb8750) — 1/11/2010 @ 5:21 pm“We’ll pretend to work, and they’ll pretend to pay us.”
AD - RtR/OS! (abf624) — 1/11/2010 @ 5:21 pmIt always seemed like an odd standard, and one which missed multiplier effects. Better to just look at GDP effects.
imdw (6951c3) — 1/11/2010 @ 5:39 pmall the fat-ass UAW whores and the SEIU thugs tuck their children into bed at night and say eff you, loser, I got mine
happyfeet (e9e587) — 1/11/2010 @ 5:40 pmmultiplier effects
Christina Romer told us back in Jan-09, that the multiplier in the stimulus bill was around 1.75 or more.
AD - RtR/OS! (abf624) — 1/11/2010 @ 5:54 pmShe has about as much credibility on economics as does Peter Orszag on commitment.
Here’s another heads up on the employment figures ahead. The upcoming census is purportedly going to entail hiring 1.2 million overall. I highly doubt those numbers will be extrapolated out of employment stats as one time temp hires. Oh, it’s going to be fat city again, I tell you. What recession? What’s worse is those wages are going to be borrowed or printed up funds going into the typical non-productive govt blackhole of “jobs.”
Infrastructure projects not creating massive jobs is totally correct. My dad worked heavy construction, and I did some while in college. Dams and highways. Those projects don’t use a lot of manpower. Just enough to operate and maintain the equipment used. Add in some grade checkers, surveyors, go-fers and skilled laborers you still are in the hundreds even on big jobs. You want hundreds of thousands of jobs…that’s residential. Which is toast until the mammoth overhang is dealt with. A good example of what huge infrastructure spending WON’T get you, just look at Japan’s lost decades. The only reason they are still moving is their excellence at manufacturing and exporting during the West’s consuming heydays. Speaking of toast…
political agnostic (0602ef) — 1/11/2010 @ 6:01 pm“Christina Romer told us back in Jan-09, that the multiplier in the stimulus bill was around 1.75 or more.
She has about as much credibility on economics as does Peter Orszag on commitment.”
Mankiw has quite a bit of praise for Romer on multipliers.
imdw (017d51) — 1/11/2010 @ 6:10 pmIf they’re no longer attempting to create/save jobs how about they cancel the stimulus and just give every American a penny, claim they saved the entire economy and declare victory.
I’d be willing to go along with it.
bill (7ed7cb) — 1/11/2010 @ 6:19 pmthe West’s consuming heydays
there’s a new salsa bar what I can walked to what has habanero salsa and mango and apple and it’s very tasty and the most expensive thing on the menu is $7.19… you know what that is, don’t you?
That’s value.
happyfeet (e9e587) — 1/11/2010 @ 6:20 pmMankiw has quite a bit of praise for Romer on multipliers.
Comment by imdw
Some village is missing its idiot.
Mankiw’s praise is rather modest.
So what are these multipliers? In their new blog, Bob Hall and Susan Woodward look at spending increases from World War II and the Korean War and conclude that the government spending multiplier is about one: A dollar of government spending raises GDP by about a dollar.
Huh ?
By contrast, recent research by Christina Romer and David Romer looks at tax changes and concludes that the tax multiplier is about three: A dollar of tax cuts raises GDP by about three dollars. The puzzle is that, taken together, these findings are inconsistent with the conventional Keynesian model.
Well, what does he conclude ?
How can these empirical results be reconciled? One hypothesis is that that compared with spending increases, tax cuts produce a bigger boost in investment demand. This might work through changing relative prices in a direction favorable to capital investment–a mechanism absent in the textbook Keynesian model.
Suppose, for example, that tax cuts are not lump-sum but instead take the form of cuts in payroll taxes (as suggested by Bils and Klenow). This tax cut would reduce the cost of labor and, if labor and capital are complements, increase the demand for capital goods. Thus, the tax cut stimulates demand not only by increasing disposable income and consumption spending (the textbook Keynesian channel) but also by incentivizing more investment spending. A similar result might obtain if the tax cut included, say, an investment tax credit.
Well, troll. I guess that doesn’t support your comment, does it ?
Mike K (2cf494) — 1/11/2010 @ 7:07 pm“Mankiw’s praise is rather modest.”
I was thinking his NYTimes Economic view piece from a year ago. But it looks like his appreciation for Romer’s research is incorrect:
http://delong.typepad.com/sdj/2009/01/the-romer-view-of-tax-and-spending-multipliers-revisited.html
So maybe we’ll just have to stick to his textbook.
imdw (de7003) — 1/11/2010 @ 7:39 pmimdw, are you really ignorant of the fact that Romer’s claims on the multiplier of the stimulus bill contradicts her own academic work?
SPQR (26be8b) — 1/11/2010 @ 7:51 pmIn fact, the Austrian/Chicago/Friedman take on the multiplier effect of government spending is more of the nature of 0.85; ie, the govt is a drag on the economy.
AD - RtR/OS! (abf624) — 1/11/2010 @ 7:55 pm“.. are you really ignorant…”
Bullseye!
AD - RtR/OS! (abf624) — 1/11/2010 @ 7:56 pmActually, most recent economic research suggests that the multiplier for government spending is about 0.75, or less than is spent. That’s what it was for World War II and more recent study. Unless, of course, you are on the government payroll.
Mike K (2cf494) — 1/11/2010 @ 7:58 pmI should add that an economics course made me a Republican in 1958.
With all the Marxist faculty these days, I’m not sure that would be true now.
Mike K (2cf494) — 1/11/2010 @ 7:59 pm“imdw, are you really ignorant of the fact that Romer’s claims on the multiplier of the stimulus bill contradicts her own academic work?”
Indeed it appears that she’s underestimating.
“In fact, the Austrian/Chicago/Friedman take on the multiplier effect of government spending is more of the nature of 0.85; ie, the govt is a drag on the economy.”
I don’t recall that being what mankiw put in his textbook.
imdw (f7b257) — 1/11/2010 @ 8:02 pmWorking for a living made me a conservative but with 20 million Americans getting unemployment benefits in 2009, life experience may not teach the lessons it used to.
DRJ (84a0c3) — 1/11/2010 @ 8:03 pm“I should add that an economics course made me a Republican in 1958.”
Only one?
“With all the Marxist faculty these days, I’m not sure that would be true now.”
So long as they only take a few courses, there might still be hope:
http://ezraklein.typepad.com/blog/2006/11/neoclassical_in.html
imdw (bb8086) — 1/11/2010 @ 8:08 pm“Working for a living made me a conservative”
DRJ – I’m pretty sure imdw does not and has not ever worked for a living, just sayin’.
daleyrocks (718861) — 1/11/2010 @ 9:51 pm“…I don’t recall that being what mankiw put in his textbook.”
Comment by imdw — 1/11/2010 @ 8:02 pm
Perhaps it is because he is neither a desciple of the Austrian, nor Chicago schools of economics, but is a “New Keynesian” – he definitely is not Milton Friedman.
AD - RtR/OS! (abf624) — 1/11/2010 @ 10:52 pmWhen contemplating the usage of any economists’ analyses as financial acumen the first question one must ask is how many wealthy economists have you come across in your own lifetime? If they have this much difficulty looking into a rearview mirror, just how valuable is any prognostication from any of them? I do value the Austrians above the rest for their reliance upon business cycles and sound monetary practices, however no one can account for the myriad of govt wild cards in virtually every market around the globe. There may never have been a literally “free market” in human history, but there damn sure are none any longer. Not with blatant currency slogging and outright market manipulation through govt agencies and sovereign wealth funds, to note just some examples.
political agnostic (0602ef) — 1/11/2010 @ 11:59 pmSo maybe we’ll just have to stick to his textbook.
Or you can just do your usual MO and put words into his mouth that he never uttered.
Dmac (539341) — 1/12/2010 @ 7:21 amI just love the so-serious intellectual discussions from imdw. The only use he has ever put to a textbook is as a stand for his favorite bong, I’ll wager.
Eric Blair (3fc3d5) — 1/12/2010 @ 7:40 amYou’re assuming that it can actually employ useful motor skills, Eric.
Dmac (539341) — 1/12/2010 @ 7:44 am