NBC's Myers is latest to repeat inflated GOP's "quarter of a million dollars per job" calculation
SUMMARY: 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.
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.
This cost per job figure is one of the more ridiculous things I've heard thrown about, as if it's that simplistic.
Krugmans analysis is that about 600 billion of the package is stimulus and the rest is not. His analysis is that it's going to be too small to have a meaningful impact. Agree or disagree, his analysis is a bit more substantive than "a quarter of a million dollars spent per job".
Thanks, Bruce, I thought I was the only one who found that a little nutty (I posted just after you below).
The whole "cost per job" number is such an irrelevant stat I can't believe it's being used as some sort of measuring stick. Another nice cozy number designed for the lazy who want to create the illusion of being well-informed and having some good hard numbers at their fingertips.
The funniest part is that they are including the tax cuts in their calculation, even though Republicans have repeatedly insisted that tax cuts "pay for themselves".
Add to that we have clowns like Michelle Backmann running around claiming that democrats will be waging a war on wealth on anyone making over $60,000 a year and in bizarro world you have a perfect storm.
http://crooksandliars.com/john-amato/michelle-bachmann-were-running-out-rich
Why do research when your information source of choice – according to the board room – will give you the numbers free of charge. The Dems should do an experiment and put out a fact or a figure that is off base but on topic just to see if the communications industry is paying attention them. Better yet, put it on Repub letterhead, that way it's sure to get printed or on the air!
Yeah, I'm all for taking the high road, but the Dems in general are making the same mistakes that have been made in the past. I cringe every time I hear a discusison of The Fairness doctrine, and the 'liberal" participant goes along with the "equal time" theme, or doesn't give the claims of "silencing dissent" the deserved ridicule.
As far as this toopic, the cost of a job, it's a ridiculous statistic, and shouldn't even be discussed seriously by any decent journalist.
If they want to talk numbers, let's talk about how because of republicans the average debt of every man, woman and child is now app. $35,000.
Don't these people fact check anything they say???? Or are they too lazy to even question anything written and read over their monitors?????
Uh, no, and yes.
BTW, that's michelle maulkin...
It's easy to see how the Republicans continue to control the debate.... the Corporate Media whores are either too lazy or too corrupt to correct the lies fed to them by the GOP Propaganda Department.
The Democrats will have to be very aggressive to fight this nonsense; they can't sit back and hope these faux journalists will bother to report the truth.
The GAO estimate, which uses a range of reasonable multipliers, is the very non-specific range of 1.2 million to 3.6 million jobs.
http://www.propublica.org/article/the-white-houses-latest-iffy-stimulus-jobs-estimates-090217
Now who do you think has a vested interest in releasing the higher estimates and ignoring the lower? These estimates are a joke while the 787 billion dollars is not.
All this hocus pocus calculations of supposed job creations are based on multipliers few economists agree upon. These estimates are from Mark Zandi, the official Obama soothsayer. How do you like spending trillions of dollars based on the estimates of one guy?
The complicit media is again taking Obama at his word over job creations that could just as well be 2.4 million short of his estimates. That is, according to the GAO, this stimulus bill could be 2.4 million jobs less than Obama promised.
Of course you don't see Krugman run those numbers do you. His $65,000 per job estimate is now ranging in the $170,000 per job.
All this is to say, those estimates, by both Obama and Krugman are simply dishonestly incomplete because they do not show the lower estimates.
So, why are the Republicans counting the tax cuts in this calculation? Don't tax cuts pay for themselves?
I found this interesting:
This chart shows the federal surplus or deficit as a percentage of GDP from 1965 to the present, with the 2009 deficit shown as estimated by Strategas Group with the stimulus added in. The debt currently being run up by the Obama administration exceeds anything in our peacetime history in at least the last 5 decades:
http://gatewaypundit.blogspot.com/2009/02/obama-makes-history-racks-up-historic.html
The "federal surplus or deficit as a percentage of GDP" link you provided takes me to a chart from 2000.
I found that interesting.
Got any credible sources? Your Gateway Pundit refers to the Bill in question as the "Generational Theft Act".
Cute. In other words, you've discovered another GOP talking points outlet.
Nerzog,
I understand why you don't like my link. However I do believe that Strategas Group is an independent organization. I did see a similar chart that I do believe was used by the CBO. I had trouble cutting and pasting so I used this one.
Take it or leave it. I thought it interesting.
The chart is useless and the conclusion is baseless. The Deficit as a percentage of the GDP would have been huge this year regardless of the stimulus.
loonz,
See the wsj for the estimate without the stimulus.
http://online.wsj.com/article/SB123440436240475615.html
Assuming the information in the piece is correct, it says the deficit could hit two dollars with the stimulus included which is approximately 13.5% of the economy. If you deduct the cost of the stimulus (spending and tax cuts), the deficit would be 1.815 trillion or 12.25% of the economy.
That should be "two trillion dollars".
But it doesn't have any of the bush deficits added in, like the war in Iraq. Or was that all just conveniently moved forward to the 2009 column?
aa, That debt is a result of the Bush administration and the Republicans for lo those many years they were in charge. They had their chance, they blew it, time for the other side to give it a go. There is no cerdibility for Republicans at this point, none.
The wingnuts who had no problems with the Republicans taking our economy to the brink of ruin now complain that extraordinary measures are required to bring it back.
Snoop,
I did not compile the chart. I don't know if it contains the war in Iraq, although I am inclined to believe it does.
Yes, the Bush administration had it's go and in many instances, they did blow it. However to say there is no credibility is a convenient way to ignore the points they bring up.
I disagreed with TARP and I disagree with the stimulus/pork bill. I do not believe that the government can spend its way out of a recession with trillions of dollars of borrowed money.
Fine. However, your opinion is a minority one. You can support candidates for office who think it's best to deal with the financial crisis by doing nothing, or better yet by cutting corporate taxes further. In fact, please do. I'm sure you'll be back in the majority in no time.
How can you, in good faith, say that "the complicit media is again taking Obama at his word" on a comment page about a story where the contrary is clearly demonstrated?
lakuip,
As you can see, the numbers created by Krugman and Obama are based on assumptions made by Mark Zandi. Even so, Krugman is simply using more assumptions to obfuscate the "cost per job" created by the stimulus/pork package. You will see they also make the best assumptions in order to justify the bill.
They leave out the low end of the CBO job estimates. You and everyone else in here take Obama at his word that the stimulus will generate 3.5 and even 4 million jobs when it is all based on variables that are really unknown. I see no one mentioning those lower estimates.
The fact that Obama leaves out the equally valid CBO estimate of 1.2 million jobs but instead publicizes the 3.5 million jobs is dishonest by omission. He is not giving us the complete picture.
I hope this explanation helps.
ps. It is absolutely insane that we have to have the government spend even $67,000 per job. Hell, give me $670,000 and I'll employ ten people easily.
The "price per job" stat is nothing but dumbed-down nonsense designed to fool simpletons, AA. Your last paragraph shows that you're squarely in the target demo for our modern sound.bite media.You have made yourself useful.
I’m interested in putting Americans back to work and alleviating some of financial hardships average Americans are facing so the cost is of little concern to me. You don't get this because you're a republican. Republicans are not interested in helping anyone but themselves.
loonz,
You can get off your high horse now. Your statement makes me laugh. How much are you doing to alleviate financial suffering of other average Americans? What government handouts do you get? Do you claim every last penny of deductions on your taxes? Do you tell the government to keep the extra? Do you (not) give to charity like Obama and Biden?
Yeah you are high minded when it is other people's money. Why don't you cough up about $9,000 that this stimulus/pork bill adds to the debt you and every other American taxpayer will now owe in addition to the rest we already owe.
You somehow must not have factored in the fact that CBO estimates that this reckless spending in the long run will slow down the economy more than if they had done nothing. So all the alleviation (which is not done by you,) is only going to make it worse in the long run by increasing the debt. Your good intentions are making it worse for average Amerians, not better.
Don't you realize that the interest on the debt that the government has to pay for borrowing the money comes out of the same pool of money that pays for those programs to help average Americans? The more the government borrows, the less they have to put into those programs. The government is in fact, robbing the future by borrowing money now. The outcome of this will surely be higher inflation, higher taxes and less real income for you and me and every other American, including the poor.
So you may pat yourself on the back that you are a caring Democrat, but like so many of the programs that supposedly help, this stimulus in the long run does the opposite. On top of that, realize that most of that money is not going to average Americans, but instead to special interest groups, and pet Democratic pork projects and States that failing and are already deeply in debt.
Go ahead and keep patting yourself on the back. You are only deluding yourself.
Too bad you weren't as concerned with the transfer of our money over the past several years to the Iraq war and GOP-connected contractors, AA. All of this newfound passion for responsibility may have kept us from the current economy rat-hole if you and your like-minded voters had been as concerned then.
Oh, wait, you were wetting your pant and waving a flag for Bush then, weren't you?
Idiot. Sucker. Imbecile. That's just in case you come back here, and would like to avoid your brain-dead hypocrisy by whining about the name-calling.
Saying that "the complicit media is again taking Obama at his word" should be supported by examples.
As far as I can tell, the complicit media is taking GOP's taking points with a far greater enthusiasm than anything Obama's been saying for a while now.
Then again, this was always GOP's strong point.
Wow, what a surprise. The media is echoing a Republican press release. Someone on th Obama team needs to start countering these bogus press releases asap. It's becoming a bad pattern.
I'm not sure what you find interesting about this? I understand you're trying to smear Obama with this.
We're in the worst recession since the Great Depression, and so our GDP is lower than normal. In order to pull us out of the recession that Bush et al put us in, it's going to require a massive influx of cash. Since we don't have huge surpluses, again courtesy of Bush and Republican spending and taxe policies, it requires a large amount of deficit spending.
What part of this do you not understand? Obama is not doing anything wrong here.
This post was supposed to be in reply to the graph that Another American posted.
Luv,
Every recession is different, but according to the unemployment and inflation figures, the recession during the Carter/Reagan years was worse. But you never hear that do you.
Maybe you weren't around then to see that there was 12 percent unemployment, 21 percent inflation and 18 percent interest rates.
Too bad facts don't back up your assertions. A lot of those claims you made actually peaked out well into Reagan's term....
Snoop.
Thanks. I think you misread my post. If you'll look again, you'll see I said "Carter Reagan years".
Ah, yes you did. I must apologize for missing that.
But, (and I have a big but!) you should note that the rate of climb of unemployment today is outpacing the carter-reagan rates. I won't speculate actuals, but I will be real interested in what unemployment is at if and when this recession hits the same length of time. Unemployment was already at 7%+ during the 80's, so doing a quick calculation shows that this recession already matches the job loss numbers from then. The only real difference right now is inflation, and if I'm not mistaken it was because of the 80's recession that government dropped the lassiz-faire approach to market regulation and have been actively trying to control inflation ever since.
It just isn't working with gas prices, we're down to around $30 a barrel and gas should be at $1.00 a gallon. Someone is artificially inflating the price!
Reagan recession would have been sufficient.
Funny. Thanks for the laugh.
My pleasure. Also, correct me if I'm wrong, but I don't remember Reagan having to contend with a collapsed housing market, a crisis in the financial services industry or a credit crunch during his recession.
Like I said, every recession is different.
Reagan had to deal with huge inflation and double digit home mortgage rates that Obama has, as of yet to face.
I'm not sure what you find interesting about this? I understand you're trying to smear Obama with this.
We're in the worst recession since the Great Depression. Every economist says that, and you're out to lunch if you think that the recession that you're touting was worse than this one is going to be. Because this is the worst recession since the Depression, our GDP is lower than normal. In order to pull us out of the recession that Bush et al put us in, it's going to require a massive influx of cash. Since we don't have huge surpluses, again courtesy of Bush and Republican spending and tax policies, it requires a large amount of deficit spending.
What part of this do you not understand? Obama is not doing anything wrong here. He's not.
We all ready meet some of the criteriea for a depression not just a resession and that is in the deflationary enviornment we are in as seen in the housing market. The drop in home values is more than just a correction.
I find it very hipocritical for the GOP, who voted en mass against the stimulus, to now be fighting tooth and nail to make sure their districts get as much of the stimulus package as possible.
GOP Fighting For Money From Stimulus They Opposed
Some GOP governers are saying that they are thinking of not taking the stimulus money marked for there states. If they do this they should recieve cuts in the next budget as they do not need the money.
This is a meaningless metric concocted for the purpose of ginning up dislike for a Democrat-championed bill. Nothing more or less. A more meaningful metric would be a forecast of how many jobs we'd LOSE without the stimulus and the resultant impact of that on tax collections, unemployment claims, the rise of foreclosures, the collapse of the real estate market, adding another 10 million people to the ranks of the uninsured, the rise in criminal behavior related to economic instability and the possible collapse of the global economy.
Suddenly that fabricated $250,000 doesn't sound so bad.
Randy
For those of you who missed it you can view NBC's Nightly News on Hulu here: http://gingagadgets.com/hulu/ - just search for "nightly news"
Krugman's assumptions might be proven false. We don't yet know what the affect will be on GDP or tax revenues to the government. Krugman should take a lesson from Jeff Miron.