Where are the 2.5 Million Jobs, Mr. President?
A job is not something you defer thinking about, when you don't have one, Mr. President. Now that you're back from vacation, I'm not looking forward to your jobs speech. I lie awake at night worrying about my two cousins and a friend of thirty years -- one lost a small business, the second is watching his business go down the tubes, and the third, who supports her handicapped daughter, can't find a job. Another friend tells me her son who graduated college a year ago can't find work. He feels like a total failure in life as only a 22-year-old can, and she is worried about him. One of his jobless college friends recently committed suicide. None of these people I love and worry about show up in the unemployment statistics.
Unemployment at 10% barely indicates the number of people in serious trouble, and the depth of the trouble they are in.
I also know two people who benefitted from the stimulus project. A mentally ill woman in my writers group received a grant to fly to California and lead a creativity workshop for schizophrenics. She was thrilled. The staff geologists in the nearby national park got a chunk of taxpayer money which they used to erect some monitors in the wilderness, part of an existing research project on seismic activity. The extra monitors weren't necessary, but they were pleased to have them.
Do you know anyone whose job was created or saved by the $800 billion in government spending? It's only likely if you're friends with a teacher, since more than two thirds of the stimulus funds went to schools, where they propped up unsustainable salary packages for one short year. At the end of the year the school districts were facing bankruptcy again, and forced to do teacher layoffs. It would have been healthier for the economy, and avoided layoffs, if all states had followed Governor Walker's reforms in Wisconsin instead of wasting half a trillion dollars. (See Do Republican Ideas Lead to Job Growth?)
Obama tells us his stimulus plan was a brilliant success. Yes, it plunged us into economy-destroying debt and deficit. The alternative would have been worse, we are told. All three of my friends and family in financial straits are loyal Democrats, and they believe him. "Obama created 2.5 million jobs," my underemployed friend tells me. "Without his policies, it would have been much worse."
"What are the jobs?" I asked him. Neither one of us had a clue.
We sat down together at the internet and did a Google search, 'stimulus job creation.'
We found out where the number 2.5 million jobs' created or saved' comes from. It comes from a formula. The formula comes from a theory. The formula says that for every dollar the government spends, 1.5 dollars' worth of economic activity is generated, and presto, jobs come out. The economic geniuses working for Obama want us to believe that by definition, since they spent almost a trillion dollars in 'stimulus', they automatically created 2.4 million jobs. This is called the multiplier effect.
The basic idea was that if the federal government prints and borrows money and sends it out, it will be spent, trickle through our economy, saving and creating unknown jobs as it goes. It's trickle-down economics, Obama-style. The benefit is temporary, because the government has to pay back its debt sometime, or collapse. Reagan's trickle-down economics turned on a spigot of private enterprise productivity and wealth creation, while Obama has created an ocean of debt.
If Obama's rationale for the 'stimulus' is that spending money creates economic activity, why do we need the government to take our money, send it to other people and then they spend it? Why don't we get to spend it ourselves?
Once you know about this magic 'multiplier effect' in which any government spending creates jobs, much becomes clear. That's why Nancy Pelosi claimed that unemployment insurance "creates jobs faster than almost any other initiative." The Secretary of Agriculture told us August 16 that Food Stamp are "an economic stimulus," explaining that "every dollar of SNAP (food stamp) benefits generates $1.84 in the economy in terms of economic activity."
The government puts a multiplier of 2 on money given to Medicaid, so that every dollar they spend on Medicaid they assume doubles in value and grows our GDP. The Congressional Budget Office reported that through the first quarter of 2011 the stimulus created between 1.6 million and 4.6 million jobs, increased real GDP by 1-3 percent, and reduced unemployment by up to 1.8 percentage points. Where did the CBO get these figures? It made them up! Using multiplier formulas -- how scientific! Payments to state and local governments for infrastructure were estimated to have a multiplier of between 1 and 2.5, whereas the multiplier for unemployment benefits, food stamps to individuals was between 0.8 and 2.1.
That's it. That's the only reality to 2.5 million jobs created or saved.
Hard to believe? The White House report of July 3, 2011 makes it explicit:
The report was written by the White House's Council of Economic Advisors, a group of three economists who were all handpicked by Obama, and it chronicles the alleged success of the "stimulus" in adding or saving jobs. The council reports that, using "mainstream estimates of economic multipliers for the effects of fiscal stimulus" (which it describes as a "natural way to estimate the effects of" the legislation), the "stimulus" has added or saved just under 2.4 million jobs - whether private or public - at a cost (to date) of $666 billion. That's a cost to taxpayers of $278,000 per job.
In other words, the government could simply have cut a $100,000 check to everyone whose employment was allegedly made possible by the "stimulus," and taxpayers would have come out $427 billion ahead.
Of the over $800 billion in stimulus funds, over $450 billion was given to people as tax rebates, food stamps, unemployment checks, Social Security and health insurance. Pro-Democrat liberal media spread White House claims: "Economists say all of those eventually lead to jobs as families spend more at the grocery store, the health clinic or the shopping mall." At the first anniversary of the stimulus in 2009,
Jared Bernstein, the Vice President's chief economist, emphasized that the 640,000 count (of jobs created or saved) represents an incomplete tally of the total jobs added or saved as a result of the stimulus package. It ignores, for example, the jobs created or saved as a result of personal tax cuts or hikes in unemployment compensation checks. We cannot collect anecdotes from Wal-Mart, Safeway, or Disney World telling us how many jobs have been produced by higher consumer spending induced by the stimulus package.
No jobs have to be directly created to claim he saved America with 2.5 million jobs!
The only private sector jobs Obama attempted to stimulate were green jobs. The $2 billion dollars of taxpayer money spent so far has been an economic disaster.
August 23, 2011 On Friday, the Times printed a harsh assessment of the state of the "green" economy-including a conclusion that the President's promise to create five million green jobs over 10 years has proven to be nothing more than "a pipe dream," with California's Bay Area providing a particularly poignant example of how "green" jobs have actually been lost, not gained.
In Seattle, $20 million in taxpayer money was donated to a company that weatherizes homes, a greenly virtuous activity.
More than a year later, Seattle's numbers are lackluster. As of last week, only three homes had been retrofitted and just 14 new jobs have emerged from the program.
In Oak Park, Michigan, a state-government-funded hybrid bus company sits dormant, out of business just two years after it drew acclaim for being part of Michigan's green future, despite millions in state taxpayer funding and a contract to sell buses to be purchased with federal taxpayer dollars.
80% of the money for green jobs has been used to buy Chinese products, as this example from a solar energy firm receiving government largess in San Jose exemplifies:
... the solar panels themselves will continue being made in China. Mayor Reed said he continued to hope that San Jose would attract manufacturing and assembly jobs, but Ms. Hartsoch said that was unlikely because "taxes and labor rates" were too high to merit investment in a factory in Northern California.
This very month, on his Midwest bus tour Obama pledged 2.4 billion more dollars for green jobs, mostly for batteries for electric cars. We already know how that will turn out. We gave $300 million of taxpayer money to a private firm, Johnson Controls, which manufactures batteries. According to the White House, the firm added 150 jobs - that means we spent $2 million per job.
Private firms with strong marketing and business plans and strong growth sell stock - they don't need government handouts. The market for green products is anemic, a bad investment for anybody, including taxpayers. Obama focuses on green jobs as a purely political calculus. It works for his re-election because it pleases liberal voters. It has a negative economic rationale and a negative economic result. Our president cares about election results, not economic results.
The 2.5 million jobs are invisible because they don't exist. The suffering of my relatives and friends and that of 25 million unemployed Americans is real, and increasingly desperate. It's time to follow the success in job creation of Republican states such as Wisconsin and Texas, and drop the unsuccessful ideas of this wastrel White House. Please, Mr. President, we can't afford another 2.5 million of your phoney jobs.