Late Friday, the White House issued a report on the efficacy of the Recovery Act, and the news was pretty good. The stimulus made the difference between an economy that was shrinking and one that’s growing, and there are as many as 3.6 million Americans with jobs today who wouldn’t have otherwise had them were it not for Democratic stimulus effort.
Much of the right, however, believes it’s stumbled onto some damaging revelations. They’re wrong, but that’s apparently irrelevant.
The conservative argument is two-fold. The first is that the stimulus created jobs, but at a cost of $278,000 each. That’s just silly, and ignores what the Recovery Act actually financed.
The other is slightly more complex. The Weekly Standard argued that the projected job growth from six months ago was nearly 300,000 jobs higher than it is now: “In other words, over the past six months, the economy would have added or saved more jobs without the ‘stimulus’ than it has with it.”
House Speaker John Boehner (R-Ohio), who’s never been much of a reader, and influential Republican economist Douglas Holtz-Eakin are both apparently fond of the argument. As Brian Beutler explained, the key problem with the claim is that it’s demonstrably false, and the result of a “fundamental misreading of the data.”
Over the past six months, and even before then, the stimulus has been winding down, and the fact that it’s now responsible for the existence of fewer jobs than it was six months ago is a function of that phase-out, and the (slowly) recovering economy, not of its inherent ineffectiveness.
Here’s Moody’s Chief economist, Mark Zandi, in an email to me, explaining the data
“It’s not that ARRA [the stimulus] is now costing the economy jobs, it is that the economy is now creating jobs without ARRA’s help,” Zandi says. “This is exactly the objective of fiscal stimulus, namely to end recession and jump-start economic recovery. The Great Recession ended in June 2009, the same month that ARRA was providing its maximum benefit to the economy. Stimulus was never intended to be a source of long-term economic growth, it was intended to stop the free-fall in the private sector. It did that.”
In its report, CEA isn’t revising its claim about ARRA’s effectiveness downward — it’s accounting for the fact that the stimulus’ impact on current employment is less than it was when the stimulus was pumping out more money, and will continue to decline. Years from, when the stimulus is responsible for few if any existing jobs, it won’t be evidence of the stimulus’ failure either.
I know there are some sensible Republican wonks out there, who are capable of reading reports and knowing what they mean, but why do they hide so well?
This reminds me a lot of the time that several Republican leaders misunderstood a CBO claim, which really wasn’t that complicated, to falsely claim the Affordable Care Act would cost 800,000 jobs. In reality, Republicans just didn’t understand the meaning of the phrase “reduction of labor.”
Imagine how much more constructive the discourse would be if more conservatives were literate.
