I was reading the report written by Obama’s economists on the predicted effects of the stimulus package, and was struck by the first figure they showed. As you can see below (the figure is taken directly from the report), the unemployment rate without the stimulus package is expected (by Obama’s economic team) to breach 9% in the first half of 2010. It falls steadily thereafter, getting back down to 5% by 2014.
In contrast, the stimulus package is expected to stop the job losses immediately, before unemployment reached 8%, and then unemployment falls steadily thereafter, getting back down to 5% by . . . . 2014.
So 5 years from now, the difference between spending the money and not spending the money will be insignificant. This is similar to the conclusions of the CBO, but it’s telling that even Obama’s own team is admitting it.
To avoid that marketing problem, Obama’s economists chose the third quarter of 2010 for their point of comparison, where the largest difference between the two curves exists. The difference equates to 3.675 million jobs, which the Dems have rounded up to 4 million. If you compare the two curves only one year later, there would only be a 2 million job difference. And a year after that it’s down to a million job difference.
By the third quarter of 2012, the difference in unemployment rates is only 0.5%. Yet check out the spending profile published by the Washington Post: the stimulus package is spending significant amounts of money out until 2015, well after it’s doing any stimulating.
But the real issue lies in the current rhetoric used in promoting the stimulus package. It is really not correct to say that the stimulus package will “create 4 million jobs.” That gives the impression that jobs that would never have been created otherwise are now being generated. A more correct statement would be, ” the stimulus package will accelerate job creation by about 2 years.”
Is that worth a trillion dollars?
