Stimulus Creates 640,000 Jobs: A Big Lie

By Jeff Harding

The Daily Capitalist

The Obama Administration knows it didn't "create or save" 640,000 jobs but they use the Big Lie to justify the huge waste of taxpayer dollars through the $787 billion American Reinvestment and Recovery Act of 2009. But on Friday the government says that it did:

... The new data come from information tens of thousands of state and local governments, private companies, colleges and community groups submitted earlier this month to show how they are making use of stimulus funds. The White House said states with the highest unemployment rates reported 25% more jobs created or saved per capita than the nation as a whole. ...

Given that the documents represent less than half of the stimulus spending through the end of September, the White House sees the data as evidence that the $787 billion American Reinvestment and Recovery Act of 2009 has already created or saved at least 1 million jobs when tax cuts and other indirect effects are included.

The administration says that puts it on track to meet its goal of creating or saving 3.5 million jobs by the end of 2010, when the two-year stimulus has run its course.

"We're moving in the right direction. We're starting to make real progress on the road to recovery," Vice President Joe Biden said. "Quite simply, the Recovery Act is performing as advertised."

Then came a devastating investigative report from AP a day before the Administration's report that:

The government has overstated by thousands the number of jobs it has created or saved with federal contracts under the president's $787 billion recovery program, according to an Associated Press review of data released in the program's first progress report.

The discrepancy raises questions about the reliability of a key benchmark the administration uses to gauge the success of the stimulus. The errors could be magnified Friday when a much larger round of reports is released. It is expected to show hundreds of thousands of jobs repairing public housing, building schools, repaving highways and keeping teachers on local payrolls.

The White House seized on an initial report from a government oversight board weeks ago that claimed federal contracts awarded to businesses under the recovery plan already had helped pay for more than 30,000 jobs. The administration said the number was evidence that the stimulus program had exceeded early expectations toward reaching the president's promise of creating or saving 3.5 million jobs by the end of next year.

But the 30,000 figure is overstated by thousands - at the very least by nearly 5,000, or one in six, based on AP's limited review of some of the contracts - because some federal agencies and recipients of the money provided incorrect job counts. The review found some counts were more than 10 times as high as the actual number of jobs; some jobs were credited to stimulus spending when, in fact, none were produced.

Listen to some of the evidence AP found:

A child care center in Florida said it saved 129 jobs with the help of stimulus money. Instead, it gave pay raises to its existing employees.


Colorado-based Teletech Government Solutions had worked with the Federal Communications Commission to come up with a job count for its $28.3 million contract for call centers fielding consumer questions about conversion of televisions to receive digital signals. The company reported creating 4,231 jobs - the highest number listed in the first stimulus accounting - even though 3,000 of those workers received a paycheck for five weeks or less. ... Now the job count is being adjusted to less than 1,000... .

Koring Group also received two FCC contracts to help people make the switch to digital television. The company reported hiring 26 people for each of the two contracts, bringing its total jobs to 54 on the government's official count. But the company cited the same 26 workers for both contracts, meaning the same jobs were counted twice. ... The FCC spotted the problem and called company owner Steve Holland, who now says the actual job count is closer to five, not 54.

Officials at East Central Technical College in Douglas, Ga., said they now know they shouldn't have claimed 280 stimulus jobs linked to more than $200,000 to buy three semi-trucks and trailers for commercial driving instruction, and a modular classroom and bathroom for a health education program.

The San Joaquin, Calif., Regional Rail Commission reported creating or saving 125 jobs as part of a stimulus project to lay railroad track. Because the project drew from two pools of money, the commission reported that figure twice, bringing the total to 250. Spokesman Thomas Reeves said the commission corrected the data Tuesday and changed the total to 73.

The White House very quickly came out and said, "it had already corrected 'virtually all' the mistakes identified by the AP and that the discovery of mistakes 'does not provide a statistically significant indication of the quality of the full reporting that will come on Friday.'" This is hard to believe in light of the government's well known talent for diligence and accuracy.

First, Carnegie-Mellon University professor Allan Meltzer questioned the concept of "job saved." “How can anyone know that his or her job has been saved?” It's a loose concept, economically speaking because there is too much data to measure that would empirically determine what leads to a job or the loss of one.

Second, look at the "jobs" that we are talking about here in the AP report. These aren't jobs in the economic sense, only in the political sense. Governments don't create wealth, they only spend your wealth. Only private enterprise creates jobs. True, people are getting paid to do work, but if there were no real jobs in the market place to generate wealth to pay taxes, where would the money come from to pay government workers?

Third, these "jobs" go away when the government support goes away. If your money is taken from you by taxation and given to some government project, and the government project ends, and/or the project was wasteful, it's over. No one asks the question of what you would have done with the money taken from you. Would you have bought a product from private enterprise? Would you have saved it, thus creating capital for future use? Instead the money is sucked out of the economy and put to politically favored uses. I mean, call centers for the FCC to tell you that digital TV is coming?

But the government snapped back to tells us:

[T]he economy's 3.5% third-quarter growth rate as evidence of the stimulus's impact. The Council of Economic Advisers believes the Recovery Act contributed between three and four percentage points to growth in the third quarter. Without the stimulus, the economy would have expanded "little, if at all," the White House said.

This is also false. As I have pointed out, if Cash for Clunkers and reflating the housing bubble with tax rebates is real growth, then all we have to do is wait for the government to spend and everything will be alright.

Hats off to AP reporters Brett J. Blackledge and Matt Apuzzo.