The White House recently announced the results of its stimulus package, billed as instrumental in averting a second Great Depression. In reality, the stimulus has been a profligate flop, even if we take the administration’s numbers at face value.
The Web site Recovery.gov breaks down stimulus expenditures and the reported number of jobs “saved or created” on a state-by-state basis. At first blush, the numbers look encouraging. Nationally, stimulus recipients report that the money has allowed them to create or save 640,329 jobs. (All figures refer to the estimates at the end of October.) Georgia reported that its share of the stimulus money allowed it to save nearly 25,000 jobs.
Once a calculator enters the picture, the rosy scenario collapses. Nationally, the federal government has thus far awarded almost $159 billion under the provisions of the Recovery Act. That works out to almost $248,000 per job saved.
The price tags are even higher in certain regions.
For example, Texas used its stimulus award to create employment at a cost of almost $546,000 per job. Wyoming was even worse at $554,000 a job. The worst offender was the District of Columbia. Thus far it has received $2.8 billion in stimulus awards and has reported that this money led to 2,274 jobs created or saved. That works out to $1.2 million per job.
A defender of the stimulus package could make the distinction between how much money a state has been formally awarded vs. how much money has actually been disbursed. The various recipients might eventually create more jobs, as previously awarded money flows into state coffers.
However, even if we take the smaller “Funds Received” numbers and divide by the total number of jobs, the results remain troubling. Idaho’s reported 2,103 jobs came at a cost of $117,000 each out of the money received so far.
These simple calculations actually understate the extent of the rip-off, as many of the claims of “jobs saved or created” are bogus. In fact, according to an Atlanta Journal-Constitution analysis, Georgia’s recipients of stimulus dollars have overstated the number of jobs they’ve saved or created by more than 1,500.
For instance, the Central Savannah River Area Economic Opportunity Authority in Augusta claimed that the stimulus saved 317 of its jobs. In reality, the stimulus money was used to give its 317 existing employees raises of 2.3 percent.
An Oklahoma company operating in Georgia counted the same 10 jobs as being created or saved six times. And a Head Start organization in Moultrie claimed that the stimulus saved 935 of its jobs — even though the group only has 508 employees.
It is impossible to go out and count the number of jobs “saved or created” by the Obama administration, because no one knows what the economy would have looked like without the stimulus. Back in January, the administration’s economic team forecast that unemployment wouldn’t break 8 percent if the stimulus package passed. By that criterion, the plan has clearly failed, since the official unemployment rate has now surpassed 10 percent.
There is yet another way to comprehend the sheer waste of the stimulus package. Recall that the total cost of the plan was $787 billion. According to the Bureau of Labor Statistics, as of October there were 15.7 million Americans looking for work. For the money the feds were willing to spend on ostensibly putting people back to work, they could cut each job seeker a check for $50,000 and reduce the unemployment rate to zero.
In practice, this hypothetical plan would be terrible. For one thing, if the government were handing out $50,000 to anyone without a job, suddenly the number of people seeking work would go through the roof. Even so, the calculation demonstrates that the stimulus package was never about providing jobs for the unemployed.
In typical style, federal politicians exploited a crisis as an excuse to borrow obscene amounts of money to hand out to their cronies. This did nothing to help the economy and leaves the hapless taxpayer to deal with skyrocketing federal debt.
Robert P. Murphy is a senior fellow in Business and Economic Studies at the California-based Pacific Research Institute.