By John Lott, ,
Published May 07, 2015
During Obama's first two years in office, he passed five stimulus/jobs bills. If you add up the promises, he boldly promised something well over 5.5 million jobs "created or saved." But reality turned out very differently: there are now 2 million fewer people working than when the first Stimulus passed. On top of that, the number of jobs should have increased as the country’s population has grown by almost 5 million. Population growth by itself should have generated more than 3 million new jobs.
President Obama claims that instead of our economy being short of over 5 million jobs, things would have been even worse without his policies. We would have lost 10.5 million jobs without all his spending. No matter how bad the job numbers get, Obama points to some hypothetical economic meltdown that was avoided by his policies. Thus, no evidence whatsoever, no matter how bad, can be used against him.
With all the different “Stimulus” and “jobs” programs, it is hard to remember all the promises and to keep track of where all the money has gone. There was the massive $825 billion "Stimulus" that was supposed to “create or save” 4.1 million jobs. Then there was a string of smaller ones: the $38 billion "Hiring Incentives to Restore Employment (HIRE) Act of 2010", which was supposed to create 300,000 jobs, and the $26 billion "Public Sector Jobs Bill of 2010" that was promised to create or save another 300,000 jobs.
And then there was the $42 billion "Small Business Jobs Act of 2010," which was supposed to create or save another 500,000 jobs. Finally, the "Disaster Relief and Summer Jobs Act of 2010" that contained a hodgepodge of items, such as $24 billion to help keep teachers, police, and firefighters employed during the recession and $600 million to create 300,000 jobs for youth ages 16 to 24.
Oddly enough, for several of these bills, 300,000 just happened to be the number for jobs "saved or created."
The Obama administration's own claims about the number of jobs created have varied tremendously. Right now, the administration claims that someplace between 560,992 and 3.6 million jobs were "saved or created" by the original $825 billion "Stimulus." The lower number comes from a survey during the first quarter of recipients. But the counting is very weird: if a project receives any stimulus dollars – even if the person worked at that company or organization before and will work there afterwards – that job is still officially counted as a stimulus created job.
The higher numbers, of several million jobs, are even more speculative. These types of numbers just live within economists’ computers, and most of the extra jobs are totally hypothetical, relying on the dubious assumption that there must exist a so-called “multiplier” effect: The people with the jobs “saved or created” spend the money, creating more jobs; and the recipients spend the extra money, creating more jobs, and so on.
But there is a big problem with all these supposedly new jobs: the resources are taken from some place to begin with.
Whether the government receives the additional money from taxes or borrowing, the increased spending by the government by necessity implies others have less to spend. Conveniently, to rack up the numbers, the Obama administration counts those who received jobs by government spending but does not subtract those who lost jobs when money was taken away from the private sector.
Moving people between jobs also temporarily increases unemployment by moving people from firms that are losing money to those who are getting it. Workers don’t instantly move from one job to another. It takes a while to find out where the new job is, so even if the total number of jobs destroyed by government is the same as the total numbers of jobs eventually created by government, unemployment will temporarily increase.
On top of that the government-created jobs are likely to be temporary and fewer than the number of jobs destroyed elsewhere for the simple reason that many of these new jobs will only exist as long as the government continues its subsidy. Whether it was ethanol, wind power or solar energy, there was a reason why people didn’t invest their own money in these areas. Few want to buy these products without a high subsidy. With the threat that these subsidies will eventually end, companies avoid committing to hiring permanent employees.
As if that was not enough, there is another serious flaw with their counting: Obama’s Council of Economic Advisers wrongly assumes that all the “Stimulus” jobs are filled by the unemployed. But that is clearly wrong. Indeed, most of those getting the “new” jobs already had a job to begin with.
A recent study by Garett Jones and Daniel Rothschild, economists at George Mason University, shows that 58 percent of workers hired by firms that received Stimulus money were people who were already employed.
And whatever jobs might have been created, they did not come cheap. No matter which calculations you use, the bottom line is similar: any jobs created were exceedingly expensive. Accepting the administration’s most optimistic 3.6 million number, it cost $185,000 per job. And if the survey of various recipients is right, the cost per job created soars to over a million dollars.
In many cases, money was just wasted completely. For instance, at Solyndra, the scandal plagued solar energy company that got $535 million from the federal government, no long term jobs have been created.
With all this money being spent, Americans would like some assurances that these various “Stimulus” bills haven’t just been a means of giving money to unions and other Democratic campaign contributors (see also here).
So how can we judge whether the job market would have been even worse without the “Stimuluses” as Obama claims? One way is to study other countries. Most nations never followed Obama’s Keynesian prescription, or chose a much lesser stimulus program. For the nine foreign countries -- Canada, Australia, Japan, France, Germany, Italy, Netherlands, Sweden, and the UK -- the U.S. Bureau of Labor Statistics has recalculated their unemployment rates so that they are comparable to ours -- none has done as consistently poorly as the United States since the beginning of 2009 when Mr. Obama became president (see charts here).
Americans might also ask how accurate Obama’s claims about jobs “saved or created” are when his administration’s numerous predictions about job growth have consistently proven wrong.
Larry Summers, who served then as Obama’s chief economic adviser, promised on January 25, 2009 that the economy would start improving “within weeks” of the stimulus plan being passed.
President Obama declared later in May, 2009 that the massive spending program was "already seeing results” and created or saved almost 150,000 jobs.
The same claims were repeated last year. In April, for example, Vice President Joe Biden again explained how many jobs the economy was going to create this summer: “Some time in the next couple of months we’re going to be creating between 250,000 jobs a month and 500,000 jobs a month.”
Rather than looking at computer models, Americans are better off judging Obama’s success by looking at unemployment rate and how many people have given up looking for work.
Obama’s Stimulus hasn’t generated new jobs. Instead it has only racked up massive government deficits that future generations will have to pay off.
John R. Lott, Jr. is a FoxNews.com contributor. He is an economist and author of the newly revised edition of "More Guns, Less Crime" (University of Chicago Press, 2010).