The Heritage Foundation’s Rea Hederman and Brian Riedl break down the numbers on “stimulus” spending and jobs.
The Associated Press is touting an estimate posted on the federal governmentâ€™s Recovery.org website that $16 billion in stimulus contract spending has created or saved 30,000 jobs. So using the White Houseâ€™s own numbers, this comes to $533,000 per job saved or created. Instead of expressing embarrassment at a policy of spending $533,000 per job â€” about ten times the median income â€” the AP quotes White House economic advisor Jared Bernstein, stating that while it is early, â€œthe early indications are quite positive.â€ Despite these â€œpositiveâ€ indications, the unemployment rate has surged to nearly 10%, despite an earlier report by Bernstein predicting that unemployment would peak at 8% with a stimulus bill.
Even this data should be taken with a grain of salt. The administration figures make sense only until one asks where the government got the money to spend. Before Washington could spend $16 billion employing contractors, they had to borrow that $16 billion out of the private economy, which now has that much less to spend supporting jobs. The White House merely shifted this spending power from the private sector to the government. And its safe to assume that had the private sector kept and spent this $16 billion rather than lent it to Washington, it could have done better than $533,000 per job.