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CBO Clears Things Up
Douglas Elmendorf, the Chief Honcho at the Congressional Budget Office has a blog.
(Doesn’t everyone?) He uses his site to introduce/discuss new reports
from the CBO. The reports are often long and tedious; Doug’s summaries
are pretty good.
He had a post last week regarding the economic impact of ARRA, (09
stimulus). In his blog Elmendorf went out his way to defuse a political
bomb. I doubt he was successful. We will hear more on this in the next
two months.
The report touts the success of ARRA. The CBO made the following claim:
CBO estimates that in the second quarter of calendar year 2010, ARRA’s policies:
Increased the number of full-time-equivalent (FTE) jobs by 2.0 million to 4.8 million
My first thought on this was that you could drive a truck through those
estimates. But if you use a mid estimate of 3mm you would have to
conclude that ARRA was a pretty big success. But then you read on:
CBO’s
estimates differ substantially from the reports filed by recipients of
ARRA funding. Those recipients reported that ARRA funded nearly 750,000 FTE jobs during the second quarter of 2010
Wait a minute. How many jobs were saved? Is it 750k or is it 4.8mm?
I happen to know a lady who runs a health center. Big one. On behalf of
the clinic she applied for ARRA money and got it. They bought needed
equipment and hired people to use it. The reporting requirements for the
money were rigorous. She had to document the number of jobs created
before during and after. Failure to do so meant money did not come.
Based on this I conclude that the reports from the ARRA recipients is
very accurate. These are the numbers the White House collected. But Doug
does not like the results. He just blows them off:
The law’s overall effects on employment requires a more comprehensive analysis than the recipients’ reports provide.
So there are hard numbers and there are soft numbers. To be fair, ARRA
was much more than a jobs program. It funded unemployment benefits and
some tax breaks. I can’t imagine how 4-5 million jobs get created from
that.
If you are an “In” you can say that you were part of a Congress that
passed legislation that saved nearly 5 million jobs. You can wave a CBO
report to prove it.
If you are a “Wanna Be In” you can say that the “Ins” failed miserably.
They spent $820 billion to create a lousy 750k jobs. That comes to
$1,100,000 per job! And you can wave the Recipients of the ARRA Funding
reports to prove it.
Ain’t America great….
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$1MM per job, that sounds like government work. Isn't that the cost per soldier in Iraq / Afghanistan ?
We are only going to make changes when they are forced upon us. Likely, that will occur because the cost of borrowing will force changes.
I am tired of hyperbole comparisons. Anyone who "knows" how things would have been different if different actions had been taken is lying. We will never know what the outcome of the great depression would have been if we had spent either more or less money. It is impossible.
Simple logic "knows" that if we hadn't bailed out the banks, the bankers that created the mess would not have been rewarded. We also "know" that government creates very little and that most, if not all creative productivity comes from the private sector. Yet, we punish the private sector and reward the public. What did you expect? It is not like a community organizer expert is all of a sudden going to be a wise expert on what the private sector needs, or why it is necessary.
I think the rise of the public employee is much like any other bubble participant - the dot-commer, the house-flipper. We are at their crescendo and like other bubbles, this one too, will crash to unbelievable depths.
How? Under its own weight. The very thing that created it, cheap, artificial money (like the dot-com or housing bubble) will crush it. Sure, you'll get your pension, it just will be paid in "old dollars", like 1969 pesos.
I'll bet that by the time this public gravy train runs its course, pensions will become a lot like food stamps. Pensioners won't even receive checks, but housing and food credits that have some circuitous correlation to actual monetary value. Look, public employees, I am sorry. But YOU chose to work for a corrupt employer. Like all deals that seemed "too good to be true", it was. If you are on ZH, though, at least you are thinking about plan B.
good points...I still say a economy that has some decent social safety net spending and some high end taxes on rich tends to produce more middle class and less desperately poor...I do think there is a place for govt enterprises and employees, private prisons, as an example, often have been more costly than government run ones...even tho I know and heartily agree public employee prison guard unions, such as in Cali, are way out of line. Many govt employee salary/benefit packages are way out of line to private employees, but some of the contrast is not just due to public unions getting out of control pensions but rather some due to how bad off private. When I graduated from HS in a white working class neighborhood, HS grads could walk out the door, get a union job at 3M, Whirlpool, Amhoist etc for 25-30k in early 80s, complete with pension, good benes...yes many public employees are doing better than that, but there was a time in private market a HS degree and showing up to work everyday got you a pretty good deal too.
Many retired Fed employees get 25,000-30,000 a year pensions but get no social security, so their pensions are not that different what a private employee would get from social security if they worked their whole life.
Is the outrageous pensions in some state employees are ridiculous, (mostly firemen and police, and in some case teachers) Govt workers should not get packages any better than private market gets workers...but I also think its a sad state of affairs that only govt is providing decent middle class lifestyle jobs anymore, because private market has eroded so much. Yes, govt workers should come down to same level as rest of us, but even if we cut their pensions tomorrow, and cut all their pay 30-50 percent, private market and private market workers would not be a bunch better off. Yes it would lower taxes some, but what is killing labor market is: technology/automation advancements, global wage arbitage, and cheap slavish illegal immigrant competition (if you are illegal, you will not exercise/get same employee protections as legal workers).
Its only fair that govt employees not make over market salaries/packages, but lets be real, those about the only decent middle class jobs out there anymore and when they are gone, US workers will feel closer to Mexican ones, than German or Canadian workers. Decline of US is not completely due to bloated govt and lean govt will not make private market way better. In fact, income disparity will go up.
Its interesting, we know unemployment is high, economy sucks, middle class have lost most of their "wealth" in stocks and house equity...and we know stimulus, as Bruce points out, spent a lot on UI, tax cuts and tax credits (that did help certain businesses, like window manufacturers, alt energy etc/) and on saving State and teacher jobs..it did some good but it hardly soothes for reasonable minds to say, It would have been worse...So while we know Stim 1 did some good, it was not enough to stop economy from being really ugly and we know there will be no Stim 2.
We also know that Soc Sec, Medicare/Medicaid, food stamps, UI and military spending are balooning deficit in totally unsustainable way.
So if we cut govt spending, balance budget, where does that leave us? Our economy will contract much more as many teachers, fire fighters, fed bureaucrats, police unemployed. Our taxes won't be an lower as even with massive spending cuts, can't get balanced without maintaing revenue and as economy shrinks, tax collections will be down...ask your state how sales taxes are doing.
If we do as fiscal conservatives ask, and I'm not saying we shouldn't, we will be in for enourmous hurt and likely a much bigger increase in poverty (no more UI, food stamps, lower Soc Sec payments etc.) and likely more wealth at top. If people are upset about 10 percent unemployment, what about 20 percent, which is likely what would happen.
We may have to do the fiscal conservative thing, cut the deficit, but we also have to be3 realisitic and know that it will cause years of hurt much much worse than now, and now is not good by US standards.
What I tire of is people dissing on current admin but acting like the alternative, stopping govt spending, will have no pain associated with and will suddenly make the US economy paradise. Again, we may have to do it, but if you are calling for spending cuts, know that UI, food stamps, $1000 a month from Soc Sec for a 55 yr old is all that is keeping some people alive right now...and when that's gone....
Just goes to show that the "non-partisan" CBO is anything but. Alas, Elmendorf's days are numbered. Next year we'll be hearing from some Republican appointee how reducing taxes for the wealthy has created 8 million jobs.
I don't really think the CBO spin matters. People have long since seen through this... if a congresscritter voted for TARP, if he voted for StimPack 1.0, he's out out of a job. There will be no StimPack 2.0.
Those municipal and local anti-jobs that it saved are the *problem*, and their elimination, not their perpetuation, is part of the solution.
My question is, in a post-industrial society, why are we even screwing around with jobs that need shovels? Is there such poverty of imagination that we couldn't have used some of that money to build industrial quantities of carbon nanotubes, or build a space elevator? Something of some lasting value rather than pushing around Medicaid eligibility paperwork or spackling holes in asphalt?
This is one of those times when the human mind's involuntary response to absurdity is stupefied laughter.
to sum up in a sexual context....does viagra still work if you got Attention deficit syndrome?
Yep - once you get outside actual direct sense experience (and even within, given the fallibility & flexibility of memory), reasonable people can disagree about the most seemingly-obvious of things. I'm beginning to think, to paraphrase Margaret Thatcher, that
We actually rub along pretty well, given such constraints! Although in the specific case of 'Ins' and 'Wanna-Bes': these aren't even two sides of the same coin; they are two halves of the same side of a bent nickel.
From the revised CBO report:
"Over time, higher debt would increase the probability of a fiscal crisis in which investors would lose confidence in the government’s ability to manage its budget, and the government would be forced to pay much more to borrow money."
I am going to propose that the FED, as it approaches the majority buyer of Ts, can control rates during monetization of debt. There will be inflationary pressure and foreign motivation to reduce holdings, but the FED as the majority buyer, will make the market and set rates. Conceivably at some point, the only outside buyers would be to offset trade.
This makes sense to me that there would be some area of control before states started to default on government obligations. (States going bankrupt first).
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There has been a lot of discussion about when bond market fundamentals no longer represent investment. When the market is subverted, it changes to a non-market. So as we venture into uncharted waters, what really will happen?
What is clear to me is we will face accute rate sensitivity. Rates cannot be allowed to go beyond perhaps the 10Y 3.5%. Any real market dynamic could quickly casue a debt crisis if rates are not controlled.
So the FED will use its power to monetize, already in motion, and continually push rates down. We should see a disconnect between actual market dynamics and intervention from the FED and primaries.
At some point with additional FED T buy QE2 programs, and even today on some underperforming auctions, is the FED the largest buyer? How would we know? If a FED buy was really in the majority would SOMA really reflect the true results? Or would the FED just work through the other channels to aquire the securities.
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The pertinent question that should be asked is what does it mean to have the FED as the majority buyer of Ts?
At what buy percentage is it clear that the FED will never be able to tighten?
Have we already reached this point?
Mark Beck
Ha, comments are turned off on his blog. That Doug, he's no dummy.
Stimulated bitches!
In 2009 the CBO were putting out some numbers that weren't looking good for Obama. The one called the CBO to the oval orifice for a little talk, after that the numbers looked more positive. So were you offered a ride on air force one or offered any other perks?
I have a lot of friends who are governmental/non-profit auditors. What a lot of munis and S/Ds are doing is using the ARRA money to pay FTEs they would normally pay. Basically they are paying regular teachers', etc salaries out of ARRA and then reporting it as a saved/created FTE. Are they saving jobs? I think that is a case by case argument. However some bloodshed in the teachers' market would be a good thing I think. (Think putting some fear into people who can make six figures for a mediocre job w/o ever worrying about being fired.)
The simple fact remains.
Without new debt "stimulus" time bombs, any "government created" job goes away because it's not organic.
$1.1M per job, pure government efficiency...LOL...only last year it was $730,000 per job. Perfect.
Friggin retards...this is becoming a crime against humanity.
Exactly--all these "jobs" will vanish without continual money printing, they are just welfare payments for govt employees and their minions.
Now, if I claimed to have created a Bazillion existential jobs at $1.1 MM each and nobody in my household got one through simple nepotism or patronage, my family would probably change their last name, buy fake social security numbers from a Russian hacker site via a public library computer and move far away so as not to face public ridicule.
Che Guevara used to take fuckers who conjured up programs like these, line 'em up against bloodstained walls and shoot 'em for wastin' the people's money.
"Now, if I claimed to have created a Bazillion existential jobs at $1.1 MM each and nobody in my household got one through simple nepotism or patronage"
It's like the buzzards are not even waiting for the victim to die. They are swooping in to pluck out the eyeballs, the victim is clearly not using them to defend himself anyways.
My personal favorite was Cash for Caulkers. Good Lord.
It's time for us adults to take the car keys away from the kids. They're not ready.
The good news for pitchforkers:
Hyperinflation will kick the crap out of civil servants before productive workers.
The bad news:
Mom and Dad are not happy about moving in.
I work in the budget Department for a State Medicaid Agency. ARRA didn't create very many jobs for us. In fact we are currently in a hiring freeze and have been for the past couple years. However, I can definately say that the program saved many, many jobs at our agency alone. Without the extension through the end of June, 2011, there would have been further cuts to our agency at the same time we're dealing with record enrollment! I realize "saved" jobs don't come close to bridging the gap between Doug's soft numbers and the reported hard numbers, but perhaps it's a piece of the variance.
So the only people who actually needed to be fired (the beaurocrats) kept their jobs while middle class America lost 8Million jobs, #ucking Great!
I think about 6 months ago there was a report in the news about city mayors complaining bitterly. Instead of the stimulus going to "shovel-ready jobs", it was being spent on keeping state and federal gov't employees paid.
I don't recall if the mayors wanted local gov't to be allowed in on the scam.
But there you have it. We've spent the money. It's gone to banksters. It's gone to union retirees. It's paying the salaries of gov't workers.
Nothing for the People.
Yeah! All those non-people got the money. I'm pissed because I didn't get any of the free money. If they are giving away money I want MY share goddamit. NOW. I'm tired of the zombies and machines getting all the free goodies. Hey, I have an idea. Stop giving away money and folks won't have to create new enemies and divide the citizenry. Maybe that would work?
Stimulus to keep federal employees paid? Rethink that statement.
I don't recall if the mayors wanted local gov't to be allowed in on the scam.
Yes
If the CBO says its safe to surf this beach then its safe to surf this beach!!
Now get buying equites ....
I don't get it. These freakin' eggheads/academics/government bureaucrats who figure that they actually have an reason for existence just need to be thrown out into the real world to see how things work. Here's an example from a trip back home to visit dear old mother in Wisconsin: she was showing me around the old neighborhood (they recently moved) and she was pointing out the new construction, and guess what? They were all from people who were/are government employees (the retired former postmaster had the biggest one, the next biggest one was from a guy who is a "big-shot at the Department of Transportation). And this is in rural Wisconsin. Un-fucking-believable. I just don't understand how people put up with this. I used to think that when the Commies attack that I'd be safe going back home to Wisconsin (lots of beer, cheese, and guns-not necessarily in that order), but fuck me, with all of those government employees, they'd probably adapt better to the commies and just want to go along with it (think Red Dawn).
Agreed, unfortunately this is a country wide problem.
The worst example is in DC, Virginia and Maryland. Everyone is ex-military or on the GS scale. And the biggest houses belong to the lawyers and government contractors.