JONATHAN CHAIT JULY 6, 2011
The Weekly Standard calculated that the 2009 economic stimulus cost $278,000 per job, a talking point picked up by Republicans in Congress. The figure relies upon some pretty poor math, reports Jake Tapper:
The Weekly Standard arrived at its figure by dividing the cost to date of the stimulus bill, $666 billion, by the low end of the estimate of how many jobs the Council of Economic Advisers reported had been created by the legislation, 2.4 million.
The Council of Economic Advisers report, issued last Friday, states that in the first quarter of 2011, the stimulus bill “has raised employment relative to what it otherwise would have been by between 2.4 and 3.6 million.”
The White House has long disputed the math of dividing the cost of the stimulus by the number of jobs created – we asked a similar question back in October 2009, when that computation resulted in the comparable bargain of $72,408 per stimulus job, as you can read at this blog post.
Then, as now, White House officials note that the spending didn't just fund salaries, it also went to the actual costs of building things -- construction materials, new factories, and such. So the math is flawed, White House officials say, since reporters are not including the permanent infrastructure in the computation, thus producing an inflated figure. White House officials also questioned why the Weekly Standard would use the lower figure from the projection of the number of jobs created, and noted that the temporary nature of the stimulus bill meant that its impact would diminish over time, when the private sector began hiring again. In other words, the number of jobs created at its peak – as many as 3.6 million, according to the Congressional Budget Office’s May 2011 report – would be more appropriate, White House officials say.
Fourth Branch takes the Standard approach and applies it to the Bush tax cuts:
[T]he Bush tax cuts passed in 2001 were estimated by the Joint Committee on Taxation to cost about $864.2 billion from 2001-2008 (the first year of the Bush tax cuts through the last year of his presidency). During that period, according to the Wall Street Journal, 2,625,000 jobs were created. That comes out to a total cost of $329,220 per job under the Bush tax cuts. And that’s if we assume that every single job which was created during Bush’s presidency was attributable to the Bush tax cuts (pretty unlikely) AND if we exclude the costs of the 2003 tax cut (estimated to cost another $350 billion over 10 years). We could have written a check for $100,000 to each person who “allegedly” had their job created by the Bush tax cuts and saved $600 billion, but they wouldn’t have received it because the check was instead delivered to really wealthy people.
My point isn’t that the Obama stimulus was good because the Bush tax cuts were bad. Instead, my point is that the math employed by The Weekly Standard is absurd. This example highlights the absurdity.
That calculation seems far too friendly to the Bush tax cuts. The Bush tax cuts were enacted at the beginning of an economic expansion, so crediting them with every job created -- i.e., to assume that in their absence zero jobs would have been created -- lacks any credence. Still, it does show that even by the standard's silly the math, the Bush tax cuts were a massive failure.