Morning Bell: $787 Billion in Stimulus, Zero Jobs "Created or Saved"
On February 11th, President Barack Obama stood on a windy hilltop in front of a dusty construction site in Fairfax County, Virginia, and promised the American people: "Here in Virginia, my plan will create or save almost 100,000 jobs, doing work at sites just like this one." Standing alongside current Democratic National Committee Chairman and former-Gov. Tim Kaine, the President continued: "Where we're standing, that could mean hundreds of construction jobs. And the benefits of jobs we create directly will multiply across the economy." Eleven months later, none of those promised jobs have been "created or saved." In fact, the Obama administration quietly announced last week that they were dropping the fraudulent "saved or created" terminology altogether.
The failure of Obama's $787 billion stimulus is particularly acute in Virginia where, as Heritage fellow Ron Utt has documented, despite $695 million in allocated infrastructure funding, only 16% of designated projects had begun. House Transportation and Infrastructure Committee Chairman James Oberstar (D-MN) even publicly complained about Virginia's slow transportation spending, writing to Gov. Kaine: "your state ranks last among all states [51 out of 51, including the District of Columbia], based on an analysis of the percentage of Recovery Act highway formula funds put out to bid, under contract and under way."
But even where infrastructure spending has been spent, the hard evidence shows that there has not been any positive effect on unemployment. According to an Associated Press analysis reviewed by independent economists at five universities, the $20 billion spent nationwide on infrastructure so far "has had no effect on local unemployment rates." And this was just the most recent embarrassing headline for the White House's signature economic policy. Since the first reporting deadline in October, newspapers and other media outlets across the country have identified 94,341 fake jobs reported by the Obama administration as jobs "created or saved" by the stimulus. After the Government Accountability Office issued a report finding "significant reporting and processing problems that need to be addressed," Obama administration spokesman Ed Pound offered this defense of the Obama administration's jobs numbers: "Who knows, man, who really knows."
Now Office of Management and Budget Director Peter Orszag issued a little-noticed memo last month ending the "saved or created" metric and instead directing agencies to count only jobs "funded" by stimulus dollars. But as Harvard University labor economist Lawrence Katz tells ProPublica, this is not really an improvement: "I just think it's a silly exercise." Instead Katz says a more accurate way to account for the effect of the stimulus is to look at the unemployment numbers put out by the Bureau of Labor Statistics.
That is a great idea. The latest BLS report issued last Friday found that the U.S. economy dropped 85,000 jobs in December, bringing the jobs lost total to 2.7 million since the stimulus was passed and 3.4 million since Obama became President. In contrast, the President's White House Council of Economic Advisers had promised total employment of at least 138.6 million by 2010. Actual employment as of December was reported to be 130.9 million, leaving the Obama jobs deficit at 7.7 million.
The problem with infrastructure spending as stimulus, and really government spending as stimulus, is that Congress does not have a vault of money waiting to be distributed. Every dollar Congress injects into the economy must first be taxed or borrowed out of the economy. No new spending power is created. It is merely redistributed from one group of people to another. Businesses are telling pollsters that among the biggest reasons they are not creating jobs is the prospect of new tax and regulatory burdens. A better solution to reduce unemployment is to simplify and reduce the barriers to business success.
Spin This, Democrats: " $787 Billion in Stimulus, Zero Jobs 'Created or Saved' "
Original post made by Ruth, Another Pleasanton neighborhood, on Jan 18, 2010