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America “May Have” Won 3.3 Million Jobs!

America “May Have” Won 3.3 Million Jobs!

The credibility of the Congressional Budget Office suffered a grievous blow during the health care debate when the CBO was forced by Harry Reid to “score” Obamacare using preposterous and plainly contrived assumptions in order to keep the cost estimates below a trillion dollars.

Now, the CBO is damaging itself some more with wildly speculative estimates as to how many jobs, and how much economic growth, have been created by the Stimulus Plan.  This headline at The Washington Post about the latest CBO report say it all:  CBO says stimulus may have added 3.3 million jobs.

Notice the “may have” language.  That is because the CBO is not calculating actual jobs created.  Rather, it simply uses economic models which purport to predict how many jobs are created, and how much economic growth is generated, for each dollar of government spending.

Hence, the CBO gives extremely wide ranges to its estimates of how the economy was affected by the Stimulus Plan:

  • “Raised the level of real (inflation-adjusted) gross domestic product (GDP) by between 1.7 percent and 4.5 percent”
  • “Lowered the unemployment rate by between 0.7 percentage points and 1.8 percentage points”
  • “Increased the number of people employed by between 1.4 million and 3.3 million,”
  • “Increased the number of full-time-equivalent (FTE) jobs by 2.0 million to 4.8 million compared with what those amounts would have been otherwise. (Increases in FTE jobs include shifts from part-time to full-time work or overtime and are thus generally larger than increases in the number of employed workers.)”

These are not real numbers, but you would not know it from the headlines. 

The CBO does not even attempt, in its full report, to compare how the economy would have performed in the absence of the Stimulus Plan:

Although CBO has examined data on output and employment during the period since ARRA’s enactment, those data are not as helpful in determining ARRA’s economic effects as might be supposed because isolating the effects would require knowing what path the economy would have taken in the absence of the law.

The Heritage Foundation, in connection with an earlier CBO Stimulus report, noted the flawed methodology of the CBO:

The CBO’s conclusion that the stimulus created jobs is based on an economic model that began with the premise that all stimulus bills create jobs. In other words, the conclusion is already assumed as a premise. Logicians call this the fallacy of begging the question. Mathematicians call it assuming what you are trying to prove….

The problem here is obvious. Once the CBO decided to assume that every dollar of government spending increased GDP by the multipliers above, its conclusion that the stimulus saved jobs was pre-ordained. The economy could have lost 30 million jobs, and the model would have said that the economy would otherwise have lost 31.5 million jobs without the stimulus. An asteroid could have hit the United States, wiping out everyone outside of Washington, D.C., and (as long as Washington still spent the stimulus money) the CBO’s economic model would have produced the same stimulus jobs data. There is no adjustment made to reflect what actually happened in the economy after the stimulus was enacted.

The American people “may have” won 3.3 million jobs.  This is what it has come to:


Question:  I wonder if any of these economic models take into consideration the economic harm from the resources allocated to repaying the debt needed to create these temporary “full time job equivalents”?
Related Posts:
CBO Credibility The First Victim Of Obamacare
Baucus: ObamaCare Creates “Near Chaos” Without More Spending
Stimulus Plan Already Creates Jobs – For Get Rich Quick Artists

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off topic, but Sen. Baucus is claiming he wrote obamacare… but didn't actually read it.

Yes, really:

CEA: ARRA raised employment "by between 2.2 and 2.8 million." In its third quarterly report on the American Recovery and Reinvestment Act of 2009, the Council of Economic Advisers (CEA) stated: "The CEA estimates that as of the first quarter of 2010, the ARRA has raised employment relative to what it otherwise would have been by between 2.2 and 2.8 million. These estimates are similar to those of other analysts, and are broadly consistent with the direct recipient reporting data available for 2009:Q4."

CBO (2009) estimates job impact of between 1.2 and 2.8 million. The nonpartisan Congressional Budget Office (CBO) estimated in May that as of the first quarter of 2010, the stimulus package "[i]ncreased the number of people employed by between 1.2 million and 2.8 million," and, "[i]ncreased the number of full-time equivalent jobs by 1.8 million to 4.1 million compared with what those amounts would have been otherwise." CBO also estimated that the unemployment rate would be 0.7 percent to 1.5 percent higher today without the stimulus package.

IHS/Global Insight estimates job impact of 1.7 million. stated on February 17 that "[u]sing updated estimates provided to PolitiFact, IHS/Global Insight estimates that 1.7 million jobs will be created or saved by the first quarter of 2010." The CEA report also cites this estimate from IHS/Global Insight.

Moody's estimates job impact of 1.9 million. The post further stated that "[u]sing updated estimates provided to PolitiFact … Moody's estimated that 1.9 million jobs will be created or saved" by the first quarter of 2010. The CEA report also cited this estimate from Moody's

Macroeconomic Advisers estimates job impact of 1.5 million. The CEA report stated that Macroeconomic Advisers estimates that the Recovery Act raised employment by 1.46 million as of the first quarter of 2010, citing an analysis provided to CEA.

I think CBO borrowed the Mann hockey stick model.

The CBO is like global warming model software. It helps those with backwards, destructive theories vindicate themselves, by concluding whatever was already concluded at the point of input. 3.3 million jobs? 3.3 million jobs. Disappearing arctic ice caps? Disappearing arctic ice caps. Go figure.

How brilliant of you to take those 'pie in the sky' CBO junk job numbers and liken it to the hundreds of pieces of junk mail I got over the years from PCH that said I WAS the winner of 10,000,000. I just laughed out loud.

All the reason I like your blog. I read these ridiculous crap releases from the CBO and get pst, then come here, read the same thing but you have me laughing over it.


Perhaps the CBO should do a study to determine how many jobs 'might' have been created had a different type of stimulus, one proven in the past to have worked like tax cuts, been used instead of this crony stimulus payoff slush fund thingy.

"lies, damned lies, and statistics!" the CBO wont be pulling levers at the ballot box in november. unemployed Americans will be. 36 days on average to find a new job. highest since WW2. and what kind of replacement job is it? we have lost equity in employment…"jobs" doesnt mean anything…employment equity does….look at it this way "equality is when everybody gets a pair of shoes…equity is when everybody gets a pair of shoes that fit."

those are the issues on voters minds…not CBO stats and propaganda.

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