Reason Foundation

http://www.reason.org
http://www.reason.org/news/show/new-rules-for-quantifying-the

Reason Foundation

New Rules for Quantifying the Stimulus

Carson Young
June 26, 2009, 9:00am

Supporters of stimulus spending have a tendency to throw around scientific-sounding numbers that predict how many jobs will be created or saved by the government’s heroic spending efforts.  These numbers are frustratingly unverifiable, as Montana Democratic Senator Max Baucus explained while questioning Treasury Secretary Timothy Geithner:

You created a situation where you cannot be wrong.  If the economy loses 2 million jobs over the next few years, you can say yes, but it would've lost 5.5 million jobs. If we create a million jobs, you can say, well, it would have lost 2.5 million jobs. You've given yourself complete leverage where you cannot be wrong, because you can take any scenario and make yourself look correct.

In response to these criticisms, the Obama administration announced on Monday a plan to actually keep track of how many workers the stimulus employs.  But how to define a job?  What are the rules? According to the AP report:

A job means a full-time, full-year job. So a student working a 9-to-5 job for his three-month summer vacation will be counted as one-fourth of a job. The part-time teacher who works all year is half a job. And the full-time highway contractor who works all year is one job.

Of course, there are some complications.  For starters, it’s impossible to count the job creating effects of the stimulus bill’s $288 billion in tax cuts, as well as any secondary effects of the stimulus, such as increased business spending.  In light of these limitations, stimulus defenders are already warning not to expect that the overall tally will account for all of the 3.5 million jobs promised at the bill’s inception, so it’s unclear how useful the count will actually be.  There’s also the concern that the people who will be relied upon to ensure the accuracy of the counting have large interests in convincing taxpayers of the stimulus’s success.

In spite of their numerous shortcomings, though, there is perhaps reason to hope that these new measures will make it easier to analyze the employment effects of specific stimulus projects.  According to White House budget office deputy director Rob Nabors, "If governors or mayors or contractors make up numbers, it's not going to take long for that to come to light."  Apparently exempt from this increased level of oversight is Vice President Joe Biden, who just last week was on Meet the Press insisting that the stimulus had already created 150,000 jobs, with 600,000 more coming in the next 100 days.  The report’s results won’t start being released until October.


Carson Young is Intern


Print This