Wednesday, August 31, 2011

Jonathan Cohn Still Thinks the Stimulus Worked

Jonathan Cohn once again calls the stimulus a success, focusing on CBO estimates for additional jobs created.  The CBO estimates that between 1-2.9 million jobs were created thanks to the stimulus (the midpoint being a little under 2 million).  Since that doesn't sound particularly successful, Jonathan Cohn really wants you to focus on the "full time equivalents" number which is higher as some workers work overtime.  That number comes in at 1.4-4 million, with a midpoint of 2.7 million full time equivalents created.  Why is that considered a success?  Because it's sort of close to the 3.5 million jobs promised.  Unfortunately, according to an independent academic study, the stimulus only saved/created 659,000 jobs at best.  And another study released just yesterday from George Mason University says that only about 42% of the jobs funded by the stimulus package actually went to people who were unemployed.  The rest of the jobs were given to people who already were working, so it's unclear what the actual net job creation of the stimulus is.

Then of course there is the real world yardstick which is, how much exactly did you spend per job?  According to the CBO report, about $700 billion of the stimulus has been spent, so that is $350,000 per job created or $260,000 per full time equivalent.  How exactly is that a success?  Were the jobs created at Goldman Sachs or something?  That sounds like a pretty big failure to me especially since we are paying interest on the funds that created those jobs.  Coupling this with the fact that the real unemployment rate is at a post-depression high (keeping the labor participation rate stable so you count the long term unemployed), the stimulus is unequivocally a failure.  Unless you are nothing but a partisan hack or are high.

No comments:

Post a Comment