Ever since the debate about the President’s stimulus package began, I’ve been bugged by one phrase he and his team keep using. They keep referring to the number of jobs “added or saved” that will result from passing the stimulus. I understand that there are departments in the federal government that track employment numbers, unemployment numbers, hiring numbers, and more. I can see how you can estimate the number of jobs added. I’ve never understood how you can track the number of jobs saved.
The implication here is that these are jobs that would have been lost had the stimulus (or some other program the President is advocating) been blocked. How exactly do you measure that? When I watch sports, I often find myself playing the “what if” game. What if the buzzer beater doesn’t go in? What if that last pitch had been called strike three? What if the officials had called holding on that touchdown play? But, I catch myself because you can’t predict what would have happened. But, this is exactly what the Obama White House is trying to do.
The administration is trying to convince you that they know how bad it would have been and how much better it is now because of their actions. I’ve come to the conclusion that this is nothing more than smoke and mirrors. This is a complete dodge. More knowledgeable men than I have realized the same thing (and much quicker than I did). Here’s Tony Fratto at CNBC:
Here’s an important note to my friends in the news media: the White House has absolutely no earthly clue how many job losses have been prevented because of the stimulus bill. None.
And later in the same article:
There is only one necessary data point to make the “jobs-saved” claim: an accurate measure of expected employment levels in the future. That baseline data is critical to measure what the employment level would be in the absence of the stimulus. Unfortunately for the White House, they cannot possibly know that measurement within any degree of confidence — and they know it.
This whole bait-and-switch is being done to make the stimulus look like a success. It’s a nonsensical statement that’s meant to make the employment numbers look good no matter what. With this formulation, there’s no way to lose! The truth is that unemployment is rising. True, it may be slowing, but it’s still rising. In fact, it’s far worse than the Obama administration ever planned.
This graph (with a description at Innocent Bystanders) explains it all:
The unemployment rate is far worse than the Obama administration said it would be without the stimulus. Hey, guys, how about we give all that money back and just live with the unemployment rate as is? At least, then, I wouldn’t be worried about the impending inflation problem.
Inflation? Yep, it’s coming. Here’s a quote from Arthur Laffer writing at the Wall Street Journal Online:
With the crisis, the ill-conceived government reactions, and the ensuing economic downturn, the unfunded liabilities of federal programs — such as Social Security, civil-service and military pensions, the Pension Benefit Guarantee Corporation, Medicare and Medicaid — are over the $100 trillion mark. With U.S. GDP and federal tax receipts at about $14 trillion and $2.4 trillion respectively, such a debt all but guarantees higher interest rates, massive tax increases, and partial default on government promises.
But as bad as the fiscal picture is, panic-driven monetary policies portend to have even more dire consequences. We can expect rapidly rising prices and much, much higher interest rates over the next four or five years, and a concomitant deleterious impact on output and employment not unlike the late 1970s.
Now, fortunately, I didn’t have to deal with finding a job or financing a mortgage in the 1970s, but I know enough to know that it was very bad. It was a cycle of inflation and rising interest rates that kept the economy painfully flat for quite a while. I’m not all that interested in experiencing what my parents did. Of course, now I can document the misery minute-by-minute on the Internet and blog about it here. Hurray.