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PolitiFact’s Problem with Long Division

10:00 AM, Aug 9, 2011 • By JEFFREY H. ANDERSON
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Last month, I wrote that President Obama’s own handpicked Council of Economic Advisors had released an estimate that the president’s economic “stimulus” had added or saved just one job for every $278,000 of taxpayer money spent.  Obama’s economists said the “stimulus” had cost $666 billion to date and had added or saved 2.4 million jobs. $666 billion divided by 2.4 million is $278,000. Yet when Speaker John Boehner tweeted, “POTUS’ economists: ‘Stimulus’ Has Cost $278,000 per job,” PolitiFact Ohio rated his tweet as “False.” PolitiFact Texas and PolitiFact Wisconsin have chimed in with identical scoring of similar statements.

PolitiFact

Photo Credit: PolitiFact

So, what does PolitiFact have against long division?  Parroting the White House (to which I responded here), PolitiFact says that the “stimulus” wasn’t all about adding or saving jobs. 

PolitiFact Ohio writes:

“After Republicans began to circulate the [Weekly Standard] blog item, White House spokesman Jay Carney said its conclusions were ‘based on partial information and simply false analysis.’ White House spokeswoman Liz Oxhorn issued a statement that noted the Recovery Act bolstered infrastructure, education, and industries ‘that are critical to America’s long-term success and an investment in the economic future of America’s working families.’

“The White House points out that Recovery Act dollars didn’t just fund salaries — as the blog item implies — it also funded numerous capital improvements and infrastructure projects.

“Lumping all costs together and classifying it as salaries produces an inflated figure.”

PolitiFact Texas adds, “We checked the White House report, and of the $666 billion stimulus total, 43 percent was spent on tax cuts for individuals and businesses; 19 percent went to state governments, primarily for education and Medicaid; and 13 percent paid for government benefits to individuals such as unemployment and food stamps.

“The remainder, about 24 percent, was spent on projects such as infrastructure improvement, health information technology and research on renewable energy.”

There are a number of problems with these claims.

First, I never said that the $278,000 per job was all spent on salaries or wages. I would never attribute anything close to that degree of efficiency to the federal government. 

Second, the expenses quoted above were all part of the “economic stimulus,” which, presumably, was intended to stimulate the economy. So either the “stimulus” spurred economic growth or it didn’t. And if it failed to add or save (many) jobs, then it at best stimulated (mostly) jobless growth. It has been a jobless stimulus.

Third, how does one divvy out (or, as PolitiFact says, “spend”) $286 billion in tax cuts (43 percent of $666 billion) yet still fail to spur much job growth? Likewise, how can $160 billion (24 percent of $666 billion) be spent on “infrastructure improvement, health information technology and research on renewable energy” without spurring much job growth? And why was $127 billion of the “stimulus” (19 percent of $666 billion) spent on teachers or Medicaid? 

As I wrote in my response to the White House, “This much is clear: Based on an estimate by Obama’s own economists, for every $278,000 in taxpayer-funded “stimulus” money that the Obama administration has spent — whatever it may have spent it on — the “stimulus” has added or saved just one job.” That remains an undeniable fact.

A less-widely reported part of my initial post noted that the conclusions of Obama’s economists also showed that the “stimulus” was now shedding jobs. In relation to estimates of what an un-“stimulated” economy would look like, Obama’s economists said that the stimulus had added or saved 2.7 million jobs as of New Year’s Day but only 2.4 million as of July 1, a decline of (to use the report’s exact figure) 288,000 jobs. In other words, over those six months, the economy would have added or saved more jobs without the stimulus than it has with it — according to an estimate from Obama’s economists. 

The entire response on this point from PolitiFact (both the Ohio and Texas versions) is to cite Moody’s chief economist Mark Zandi, who told the left-leaning website TPMDC that “the Weekly Standard misinterpreted that data.” That was good enough for PolitiFact. Never mind that Zandi is a Keynesian economist whose estimates of the stimulus’s likely effects were cited (see table 4) by Christina Romer, the first head of Obama’s Council of Economic Advisors, before the “stimulus” was even passed. In other words, Zandi said it would work, and now he says it worked.

Further quoting Zandi, PolitiFact writes, “‘It’s not that ARRA [the stimulus] is now costing the economy jobs, it is that the economy is now creating jobs without ARRA’s help,’ Zandi told TPMDC. ‘This is exactly the objective of fiscal stimulus, namely to end recession and jump-start economic recovery.’” 

Zandi’s claim, however, doesn’t square with the numbers provided by Obama’s economists. They show that the gap between the number of jobs with and without the “stimulus” is narrowing. The “stimulated” economy is not “creating jobs without the stimulus’s help” — at least not at the rate that it would have created them had the “stimulus” never been passed. 

Put otherwise, if the “stimulus” added or saved 2.7 million jobs through the end of last year versus the number of jobs that would have been added or saved without it — which is exactly what Obama’s economists assert — then it has correspondingly lost, or failed to save, 288,000 jobs since then. In other words, it’s shedding jobs.

I rate PolitiFact’s scoring as “False.”

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