Stimulus Hit-Piece Ignores Reality

(Apparently, Adam Savage wrote the GOP playbook for ’12… you know, “I reject your reality and substitute my own?” – promoted by ProgressiveCowgirl)

In an article in the Weekly Standard that has been re-tweeted around the beltway, a new standard has been set for intellectual laziness. The purpose of the blog post, to create a talking point, is just as simplistic as the methodology used to reach it’s conclusion; that every job saved by the Stimulus cost taxpayers $278,000 per job . Using a 4th grader’s math skills, the total amount of the American Recovery and Reinvestment Act distributed thus far, $666 billion, is divided by the number of jobs saved or created.

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.

Unfortunately, 4th grade reading skills were not used in analysis of the report that the author cites, The Economic Impact of the Recovery and Reinvestment Act.

Employment shows the same pattern of an accelerating decline before the Recovery Act was passed followed by a significant improvement after. In the first quarter of 2009, the economy lost  an average of 784,000 jobs per month.  Job losses fell to 515,000 per month in the second quarter, 255,000 per month in the third, and  138,000 in the fourth.  The economy began adding jobs in 2010, with average gains of 15,000 per month in the first quarter, 97,000 per month in the second quarter, 65,000 per month in the third quarter, and 141,000 per month in the fourth quarter. Solid job gains continued into 2011 as an average of 165,000 jobs were added per month in the first quarter.The reversal in the average monthly change in employment over the past eight quarters was among the largest on record. (Rork emphasis)

The Orwellian assertions about what the report states are pretty bad. Even worse is that in trashing the Stimulus, the Weekly Standard’s columnist is essentially contradicting conservative ideology. Roughly a third of the stimulus was distributed through tax cuts. Among them were $122 billion in individual tax credits, $89.3 billion in “Making Work Pay” tax breaks, $33.4 billion in tax incentives for businesses and $2.1 billion in tax-exempt bonds to expand industrial development. If the amount of the ARRA set aside for tax cuts is included in Jeffrey Anderson’s rudimentary calculation, this marks the first time I’ve heard a conservative columnist argue that tax cuts don’t create jobs.

It is truly breathtaking to hear Anderson admit in his article that the Stimulus has created millions of jobs and stopped an economic freefall, all the while using tortured logic to assert it has cut jobs.

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.

Goodness me. Looks like someone missed this paragraph on the second page of the report:

The Recovery Act was designed to be temporary. The amount of stimulus outlays and tax reductions has begun to decline and, as discussed in previous reports, as it does so the impact on the level of GDP and employment will lessen over time.

That’s right, folks: because the stimulus is ending, it is bad for jobs. I hope this guy isn’t getting paid for his writing. If he is, it’s really going to hurt my pride. It is as if he wrote his article without the report existing to contradict him.

All sides agree on these incriminating numbers – and now they also appear to agree on this important point: The economy would now be generating job growth at a faster rate if the Democrats hadn’t passed the “stimulus.”

And now the report he is writing about:

CEA estimates that as of the first quarter of 2011, the ARRA has raised employment relative to what it would have otherwise been by between 2.4 and 3.6 million (Rork emphasis)

He even suggests that $100,000 checks should have been given to citizens instead of investing in education, energy, transportation, infrastructure and research and development. The commonality in the areas I just listed? The U.S. is falling behind other countries in all of them. They are investments. Just taking the total cost of the program and dividing it by jobs created, of which there are many estimates, is intellectually disingenuous and completely ignores what can be learned from a 2 minute trip to Recovery.org.

The fact is that the vast majority of economists praise the Stimulus for doing what it was aimed to do, invest in key areas and halt an economic freefall:

Whenever you talk about counterfactual versions of the 2009 stimulus bill, you end up with some version of the same response: The stimulus failed – after all, look how high unemployment is! – and now you’re telling me it should’ve been bigger? What’s wrong with you?

Most authorities don’t think the stimulus failed. The nonpartisan Congressional Budget Office, for instance, says it created between 1.2 million and 4.6 million jobs “compared to what would’ve happened otherwise.” IHS Global Insight, Macroeconomic Advisers and Moody’s Economy.com all estimate that the laws ultimate impact will be roughly 2.5 million jobs. Economists Mark Zandi and Alan Blinder put it at 2.7 million jobs.

Look at this pretty graph:



Let’s imagine for a moment that we had 2.5 million less jobs and 3% lower GDP. That is what Jeffrey Anderson is advocating for. Anderson’s post was not written to propose an alternative plan or solution, not to critique the policy behind the stimulus, but to create a deceitful talking point to attack a program that has saved the jobs of millions of hard-working Americans. It is political commentary at its worst.

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27 Community Comments, Facebook Comments

  1. Ray SpringfieldRay Springfield says:

    It’s about power.  

    • Libertad says:

      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.В 

  2. ProgressiveCowgirlProgressiveCowgirl says:

    This is obviously where he learned to calculate approval ratings.

  3. Gilpin Guy says:

    to initiate several wildfire mitigation projects that were deemed the most critical to human safety and evacuations.

    All told about $200k was spent paying local cutters to thin some roadsides and subdivisions.  One of the contractors, Native Ecology from Rollinsville (local town in the county), is run by Barry Bennet who has a Phd in Botany.

    The devastating wildfires in the southwest show the wisdom of such an investment so while conservatives gnash their teeth and wail about the horrible ARRA, I sleep easier knowing that my emergency evacuation routes have been improved.  It was money well spent and gave our local cutters good jobs.

    • Libertad says:

      rolling back the economic devastation wrought on the logging and timber industry by failed government intervention, thus helping to control the pine beetle and created a whole lot more real private sector jobs that actually generate sustainable tax revenues.

  4. ArapaGOPArapaGOP says:

    It was good for the favored few who got checks. Everyone else weathered a recession without the government’s help. Nobody made my mortgage payment in 2009, 2010, or today.

    • Diogenesdemar says:

      Nobody made my mortgage payment in 2009, 2010, or today.

      Must be the government’s fault.

    • Gorky PulviczekG Pulviczek says:

      Most people’s taxes were cut in 2010 ($400 for single filers, $800 for joint filers).  Almost everybody, effectively, got a check, you included.

      Now, maybe you’re arguing that much more should have been done.  With that, I can agree.

    • Libertad says:

      The actions of Obama-Pelosi have established for many future decades an unrepairable course of economic and social destruction that will continue to nip at the heals of any basic American capitalist based investment.

      But worse for them are the trillions of missing taxes that will never appear on the governments rolls. These are the trillions that need to be applied to the massive debts they continue to need for reliance in pursuit of new government program development and spending growth. Sure they’ll get the lame stream media to continue to carry their torch of Mo’ Taxes and those holding or creating jobs will have to bare even high amounts of tax expense.

      Your succinct analysis might leave these liberals with the impression that only minor redistribution was achieved, when in reality, they have accomplished what only UBL could have dreamed of …. the economic retardation of our great nation.

    • cunninjo says:

      There are very few industries that can say they didn’t benefit from the stimulus in some way. Whether they received government contracts through ARRA, have a supplier that will benefit from improved roads and highways, works in any way with a state government or public university, received a tax break, has clients that received tax breaks, etc.

      More than anything, the stimulus kept state governments from having to drastically increase taxes and fees on individuals and businesses to balance their budgets.  

  5. skipickle says:

    That graph is a talking/laughing point for the GOP – shows w/o ARRA that unemployment would hit gasp 9%. We wish. Actual results: http://data.bls.gov/pdq/Survey

    Couldn’t you find a graph that shows actual results and projections of what would’ve been? I’d be interested to know what the learned economists think – would the UR have hit 12%? 15%?  

    • c rork says:

      From all of the estimates I have in my post, we are talking around 2.7 million more folks unemployed and 3% less GDP. I used the graph to illustrate a scenario without the stimulus, which was a little harder to find. Using the one you posted wouldn’t have fit with the point i was trying to make.

      To be honest, and the report says this, it is extremely hard to predict what would have happened without the stimulus. But I will take a look and see what I can find.

    • c rork says:

      I linked to Ezra Klein’s article which contained the graph. I have just discovered the link doesn’t send you the right place. The article:

      http://www.washingtonpost.com/

      This was a prediction of what would happen with the stimulus. I know hindsight is always 20-20, but would you have foregone the stimulus if this was the prediction you were given?

  6. JeffcoBlueJeffcoBlue says:

    One the scale of Tipton Chihuahua BS, which I am officially inaugurating right here, on a scale of five i give this Tipton-Tweeted bullshit:

    Three chihuahuas. It would have been better if Tipton himself had (tried) to Tweet it.

    There will be more! I will keep the chihuahuas handy.

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