Report: Obama's stimulus plan is creating new jobs
The nonpartisan Congressional Budget Office reported Tuesday that the stimulus has yielded between 600,000 and 1.6 million new jobs. But the stimulus's overall economic impact is uncertain, it said.
Federal stimulus programs are sustaining as many as 1.6 million jobs this year, the nonpartisan Congressional Budget Office says in a new report.
The assessment comes after weeks during which the White House has faced skepticism about its claims that the American Recovery and Reinvestment Act (ARRA) has created or saved more than a million US jobs.
Although the CBO report stamps the White House estimates as credible, it's not a full-fledged endorsement of the Obama administration view.
The study's larger message is that the Main Street impact of the $787 billion stimulus is very hard to gauge. The White House might be right. Critics who say the stimulus is doing nothing for jobs are probably wrong. But beyond that, the CBO's margin of uncertainty is huge.
Citing different estimates of how effective the stimulus is, Congress's economists say the number of jobs created could span anywhere from 600,000, at the lower end, to the 1.6 million high-end figure.
Obama's job-creation summit
With the unemployment rate now above 10 percent, President Obama is holding a summit with business leaders later this week on job creation. And congressional Democrats are piecing together legislation for early next year to bolster the Recovery Act with additional job-creation efforts.
Perceptions of whether the stimulus is working could affect prospects for such a jobs bill, which could include a tax credit for employers who hire. Congress is also considering additional aid to state and local governments -- designed to reduce budget-related layoffs next year.
Democrats seized the CBO report as confirmation that stimulus spending works.
“This report leaves no doubt that the economy would be in much worse shape if the Recovery Act had not been implemented," Rep. George Miller (D) of California said in a statement Tuesday. "Unemployment would be higher, and GDP would be lower."
The report estimates that the jobless rate would now be anywhere from 0.3 to 0.9 percent higher, without the Recovery Act.
GOP points to persistently high unemployment
Republicans say the stimulus is not living up to expectations, however, noting that the jobless rate today is higher than the White House or other forecasters expected in February when the ARRA was passed. They say Obama policies are destroying jobs rather than creating them, and adding to the national debt in the process.
"America’s businesses -- especially the small businesses that create most of the economy’s new jobs -- are holding off on hiring due to uncertainty surrounding Washington Democrats’ job-killing agenda," House minority leader John Boehner (R) of Ohio said in a statement last week. As examples he cites proposed healthcare mandates, a possible energy tax to address climate change, and support for unionizing workplaces through an employee “card check” process.
Representative Boehner announced Tuesday that he’ll hold a “where are the jobs?” discussion with economic experts on Dec. 3, the same day that Obama convenes his jobs meeting. What both sides agree on is that more jobs are needed, after a recession that doubled the ranks of the unemployed to some 15 million Americans.
Economists disagree over stimulus effects
Why did the CBO report give such a loose estimate of the Recovery Act's job-creation effects? It would have been controversial to do anything else, because economists haven't been able to agree on how to tally those effects.
The White House tried an unprecedented effort to get recipients of stimulus money to report the direct job impacts. Administration advisers never promised that these estimates would be 100-percent reliable, but in the weeks since a major data release on the website www.recovery.gov, numerous holes have appeared in the recipient-reported numbers. The CBO report, released Monday, lists various reasons to doubt the reliability of that bottom-up method of gathering data.
The other way to tally jobs saved is to use general economic models, but economists don't agree on the formulas to use. Many economists say the White House has used an optimistic estimate of the "multiplier" -- the degree to which a dollar of government spending adds to the gross domestic product. The CBO’s lower-end job estimate reflects a more conservative view of the multiplier effects.
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