President Obama’s “stimulus” package has been dogged by controversy since its enactment. There have been questions about the accuracy of reports of jobs “saved or created” by the stimulus spending, claims that the money really was used mostly to maintain public employee jobs and to allow state governments to defer their own deficit-reduction efforts, and an admission by President Obama that there were no “shovel-ready” projects to be funded, notwithstanding what was represented when the “stimulus” legislation was enacted.
The most recent analysis of the President’s Council of Economic Advisers, released Friday, estimates that the “stimulus” has cost $666 billion and produced between 2.4 million and 3.6 million jobs. The 2.4 million jobs estimate was developed using the “CEA Multiplier Model” and the 3.6 million estimate was based on the “CEA Statistical Projection Approach.” Republicans and The Weekly Standard have used the lower estimate, divided it into the total cost of the “stimulus,” and concluded that each of the 2.4 million jobs cost the taxpayers $278,000. The White House responds that such an analysis is biased because it uses the lower jobs estimate and does not consider the tangible items that were built using “stimulus” funds. Whose spin is closer to the truth? When you consider that both jobs numbers are based on theoretical economic models and undertake the slippery task of estimating jobs “saved,” you may as well argue about how many economists can dance on the head of a pin.
Outside the Beltway, I think there is general consensus that the “stimulus” legislation did not deliver much bang for the buck. The “stimulus” was sold as a way to massively jump start the economy, prevent high unemployment, and ensure a speedy recovery. Those things clearly haven’t happened. We’ve spent more than half a trillion dollars and we are still facing a stagnant economy characterized by high unemployment and low growth. It’s as if we’ve gone on a bender, the intoxication has worn off, and we’ve now awakened to a painful hangover and a gigantic bar tab that we really couldn’t afford in the first place.