On NBC's Nightly News, Lisa Myers stated of the final version of the economic recovery bill: "If the package creates or saves three and a half million jobs as predicted, it will cost a quarter of a million dollars per job." Her report echoed a claim in a January 15 press release issued by Republicans on the House Appropriations Committee. In fact, economists note that the figure is based on false assumptions.
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On the February 17 broadcast of NBC's Nightly News, senior investigative correspondent Lisa Myers stated of the final version of the economic recovery bill: "If the package creates or saves three and a half million jobs as predicted, it will cost a quarter of a million dollars per job." As Media Matters for America has documented, numerous media figures have similarly claimed that the recovery plan will cost more than $200,000 per job created, echoing a January 15 press release issued by Republicans on the House Appropriations Committee, which calculated the per-job cost by dividing the estimated total cost of the stimulus package by the estimated number of jobs created. But economists, including Center for Economic Policy Research co-director Dean Baker and Nobel laureate Paul Krugman, note that the figure is based on false assumptions.
In a January 24 post on The American Prospect's Beat the Press blog, discussing an earlier version of the economic recovery bill, Baker wrote: "The Republicans have become fond of saying that President Obama's stimulus package will cost $275,000 for every job created. The media have been typically derelict in simply reporting this number without making any assessment to evaluate it -- as though readers in their spare time are supposed to determine whether it is accurate or not." Baker wrote that the effective number of "job-years" created or preserved is approximately twice the 3.5-4 million that those promoting the figure have claimed, since many of those jobs will last more than one year. Baker continued:
Okay, let's do the reporters' work for them. First, where do the Republicans get this number? They divide the the $825 billion cost of the stimulus by 3 million jobs that President Obama had originally pledged.
Their arithmetic is right but both numbers are wrong. First, the projections from the Obama team is that their package will create 4 million jobs, not 3 million. Furthermore, it is important to note that this over 2 years, not one year.
The cost is also wrong, or at least misleading. If we assume that the stimulus will work as planned, then it will boost GDP by approximately 1.5 times the amount of spending or $620 billion a year. If GDP rises by this amount, then it will translate into roughly $155 billion a year in higher taxes/lower spending than if we didn't do the stimulus. This is money that should be subtracted from the cost to the taxpayers.
So, if net out the increased revenue from the growth generated by the stimulus we end up with a 2-year cost of $515 billion which will generate roughly 8 million job-years. That comes to about $65k per job year, less than one-fourth of the Republicans' number.
Similarly, in his January 25 New York Times column, Krugman wrote, "As the debate over President Obama's economic stimulus plan gets under way, one thing is certain: many of the plan's opponents aren't arguing in good faith. ... The true cost per job of the Obama plan will probably be closer to $100,000 than $275,000 -- and the net cost will be as little as $60,000 once you take into account the fact that a stronger economy means higher tax receipts."
Moreover, claims reducing the value of the bill to a per-job cost figure disregard tangible benefits of the stimulus package besides job creation, such as infrastructure improvements and investments in education, health, and public safety.
From the February 17 broadcast of NBC's Nightly News with Brian Williams:
MYERS: Conservative economists say that though some of the spending is worthwhile, the package is not properly designed to stimulate the economy.
ROBERT BARRO (Harvard University professor of economics): It's gonna waste a lot of money, particularly on the expenditure side. On the tax side, it doesn't provide incentives. It's basically throwing money at people. It's not the useful way to expand the economy on either side.
MYERS: Then there is the price tag. If the package creates or saves three and a half million jobs as predicted, it will cost a quarter of a million dollars per job. The Obama administration says the cost of doing nothing would be much greater -- in human and economic terms. Lisa Myers, NBC News, Washington.