Governors don't create many jobs. Can presidents?

President Obama's jobs programs may put people to work. But stimulus has been expensive and hasn't jump-started the economy.

By , Business editor

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    President Obama gestures after delivering a statement in the White House Rose Garden last month where in he urged Congress to pass a federal highway bill. On Sept. 8, 2011, he was scheduled to unveil his jobs program.
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Elected officials always claim credit when good things happen to the economy.

And there is a connection between the powerful engines of government policy and the jobs that appear afterward. From 30,000 feet away, it looks as solid as a jet contrail. But the closer one gets to it, the more tenuous that connection looks, especially in the short term.

That hasn't stopped candidates from taking credit anyway. On Wednesday, three Republican presidential candidates sparred over their records of job creation as governors. On Thursday evening, President Obama was scheduled to unveil his much anticipated jobs program.

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But really, is there much that any elected official can do?

“On the margins, politicians can have an influence,” says David Neumark, professor of economics and director of the Center for Economics and Public Policy at the University of California, Irvine. But “there's a lot of blame and credit that get thrown around and taken that are not merited.”

The easiest example is the governors, whose powers over the economy are limited. When Texas Gov. Rick Perry pointed to his state’s job creation in Wednesday's GOP debate, rival Mitt Romney, former governor of Massachusetts, was quick to point out that Texas has benefited from an oil boom and a low-tax, business-friendly environment long before Mr. Perry came on the scene.

So what did Perry’s presence add?

In the four years between July 2007 and July 2011, Texas employment grew 2 percent while the US employment fell 4.7 percent. But most of that was due to Texas, not Perry.

His policies accounted for less than 0.1 percent of Texas’ job growth, calculates Harvard economist Edward Glaeser in a Boston Globe column Thursday. “While Perry can claim to be a faithful representative of the Texas model, he hasn’t outperformed his state’s history,” Mr. Glaeser writes.

Mr. Romney’s effect on Massachusetts’ economy during his tenure was actually negative: -1.5 percent per year; worse, if Glaeser tries to isolate the Romney effect. Utah Gov. Jon Huntsman beats both men on job creation. Glaeser figures he’s associated with a better than 1 percent rise in employment and a 1 percent decline in unemployment in his state.

That's nice, but state economies are influenced far more by the national economy and the industries and resources peculiar to their region. The effect of governors' tax credits, enterprise zones, and other job-creating policies “run from no effect to smallish effect,” says Mr. Neumark,.

A president is far more able to create jobs than governors, in part because he can spend a lot more money – as Obama has done and President Bush before him. Their stimulus programs kept the economy from losing another 8.5 million jobs, according to economists Mark Zandi of Moody’s Economy.com and Alan Blinder of Princeton.

That money kept the Great Recession from becoming something much worse, but it also proved to be quite expensive, Mr. Blinder points out. Those programs will end up costing taxpayers more than $800 billion when all is said and done, according to various estimates. That means that for every job created or preserved, taxpayers spent roughly $100,000 per job.

Ugh.

In Senate testimony a year ago, Blinder argued for more efficient stimulus: a temporary tax credit for new jobs and a temporary public employment program for relatively low-wage workers, which would cost only $30,000 to $40,000 per job.

Conservatives argue that a more effective – and cheaper – jobs program would be to eliminate costly government regulation. Many business leaders claim that the Obama administration has hurt the recovery by imposing too much regulation.

“Government by all reports played a tremendous role in discouraging hiring,” says Gary Shilling, president of an economic consulting firm in Springfield, N.J., and author of "The Age of Deleveraging."

In the end, though, whatever the federal government does, particularly in the short term, is easily trumped by changes in the business cycle, especially in the aftermath of the biggest downturn since the Great Depression, Mr. Shilling adds. “Nobody looks good in these circumstances. God himself would have trouble" getting reelected.

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