Stimulus Numbers Exaggerated

Despite this ongoing deterioration in the job market, the Obama Administration continues to argue that the $800 billion stimulus bill has improved the economy. On October 30, the Administration released data claiming that the stimulus has created or saved 640,000 jobs. These claims are mistaken, as demonstrated by the 2.8 million jobs that have been lost since the stimulus became law. The Administration’s figures greatly exaggerate the positive effect of the stimulus for two reasons:

1. The data used to create these estimates contains serious flaws. The Administration provided unclear guidelines for how to report jobs created or saved. Media analyses of these jobs reports have found severe errors. For instance, the Associated Press found that two-thirds of the 15,000 jobs one agency reported creating or saving did not really exist. Rather, the agency reported workers who received raises with stimulus funding as having their jobs “saved.”[1] In another case, a shoe store in Kentucky that provided nine pairs of boots to the Army Corps of Engineers for $889.60 reported saving nine jobs.[2] Such errors pervade the stimulus job creation estimates.
2. A deeper problem with the Administration’s numbers is that they estimate the wrong figures. The Administration estimates the jobs directly funded by stimulus spending. However, they ignore the jobs that the money spent on the stimulus would have otherwise created. Congressional spending does not create wealth; it redistributes it. Had Congress not passed the stimulus bill, the private sector would have used those funds on other projects that would have also created jobs… MORE

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