Riedl falsely suggests Obama promised to end net job losses

From Riedl's February 18 New York Post op-ed:

Last year, White House economists claimed that the $862 billion stimulus would create 3.3 million jobs. Since then, the nation has lost more than 3 million jobs.

That's a 6.3 million jobs gap. By the White House's own standards, the stimulus failed.

So President Obama has shifted his argument. Sure, the economy lost jobs, he concedes -- but without the stimulus, it would've lost nearly 2 million more jobs.

In fact, Obama said stimulus would “slow” job losses

Obama: “Magnitude of the crisis” means “you're going to have some net job loss” even with stimulus. During a February 9, 2009, press conference, Obama stated that because of “the magnitude of the crisis and the fact that it's happening worldwide,” even with the stimulus package. Obama added: “That still means that you're going to have some net job loss, but at least we can start slowing the trend and moving it in the right direction.”

Administration's estimate of stimulus job impact calculated from “the no-stimulus baseline.” In a January 9, 2009, report on the job impact of a “prototypical” stimulus package “in the range that the President-Elect has discussed,” Christina Romer and Jared Bernstein estimated that a stimulus package would raise employment by between “3.3 to 4.1 million jobs” by the end of 2010. The report clearly notes that this estimate is calculated “relative to the no-stimulus baseline” and is therefore not an estimate of the net change in jobs by the end of 2010.

Riedl said the White House estimate of saving nearly 2 million jobs so far is based on the administration's “faith-based economics”

From Riedl's February 18 New York Post op-ed:

This is nothing but faith-based economics. The White House estimate of “saving” nearly 2 million jobs is based not on observations of the economy's recent performance -- but merely on the administration's unshakable belief that deficit spending must create jobs and growth.

Specifically, the White House staff's “proof” that the stimulus created jobs is an economic model that they programmed to assume that stimulus spending automatically creates jobs. How's that for circular logic?

In other words, even if we'd lost 20 million jobs, their models would basically crank out the conclusion that we'd have lost 22 million without the stimulus.

[...]

The stimulus theory is that government spending injects new dollars into the economy, thereby raising demand and spurring economic growth. That makes some sense -- if you don't ask where the government got the money.

Congress doesn't have a vault of cash waiting to be distributed. Every dollar it “injects” into the economy must first be taxed or borrowed out of the economy. No new income, and therefore no new demand, is created: It's merely redistributed from one group of people to another.

But independent analysts agree stimulus has increased employment and GDP compared to no-stimulus baseline

White House economic advisers: “CEA's estimates ... are consistent with a broad consensus of numerous professional forcasters.” In a quarterly report issued January 13, the White House Council of Economic Advisers (CEA) estimated: “As of the fourth quarter of 2009, the CEA estimates that the ARRA has raised employment relative to the baseline by between 1½ and 2 million. The CEA estimates for both the effects on GDP and employment are similar to those of respected private forecasters and government agencies.” The report indicated that the nonpartisan Congressional Budget Office estimated that the stimulus raised employment by between 800,000 and 2.4 million jobs through the end of 2009 and that private analysts at Moody's Economy.com estimated that the measure raised employment by 1.6 million jobs. From the CEA's quarterly report:

Politifact.com stated on February 17, “Using 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. And Moody's economy.com estimated that 1.9 million jobs will be created or saved by that quarter." Politifact also noted that “Gus Faucher, the director of macroeconomics with Moody's economy.com, said he disagrees 'very strongly'" with Riedl's statement that “every dollar” spent on the stimulus “must first be taxed or borrowed out of the economy.” Politifact said Faucher argued “that in a weak economy, the government isn't displacing other economic activity but is instead creating new economic activity.”