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Tilting at Windmills

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February 17, 2010

NOTHING BUT 'NET'.... It's now impossible for serious observers to claim the stimulus didn't create new jobs. The leading economic research firms -- IHS Global Insight, Macroeconomic Advisers, and Moody's Economy.com -- estimate that the effort has already created as many as 1.8 million jobs, and will create about 2.5 million jobs when all is said and done. As far as the independent Congressional Budget Office is concerned, those are conservative estimates -- the CBO believes the stimulus is already responsible for as many as 2.4 million jobs.

It leaves the right looking for alternate rhetorical strategies. Today, House Republican Conference Chairman Mike Pence (R-Ind.) tried a new tack in a press release. Notice the addition of one key word to the GOP talking points:

One year [after the stimulus bill became law], not one net job has been created as unemployment rose from 7.6 percent to nearly 10 percent nationwide. [emphasis added]

Matt Finkelstein explained why this rhetorical shift matters: "The distinction here is important. By shifting the focus to 'net jobs,' Pence is effectively conceding that the Recovery Act did create jobs -- that, while unemployment rose more than expected, we would be even worse off if the program hadn't passed."

This also suggests that Republican officials are starting to worry, at least a little, that the economy might be improving far more than they'd like. If job creation starts picking up in a meaningful way in the Spring, as the Obama administration expects, the good news for the country may be bad news for the GOP's midterm election strategy. They'll need something negative to say, and pointing to net job growth may fool a few people.

But probably not many. It's really very foolish -- the recession began in December 2007, and the economy fell off a cliff in September 2008. The month the president took office, thanks to conditions Obama inherited, the economy lost 741,000 jobs. A month later, it was 681,000. A month after that, it was 652,000. Of course there's going to be a net job loss. The net loss will exist for quite a long while. When a nation experiences a downturn of this severity -- easily the worst since the Great Depression -- it takes a very long time to make up the lost ground.

The goal is to see improvements and growth. Maybe Pence understands this, maybe not -- he is a few threads short of a sweater, if you know what I mean -- but either way, this "net job" talk is absurd.

Steve Benen 4:45 PM Permalink | Trackbacks | Comments (29)

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Comments

before everyone gets all excited analyzing and critiquing the "net jobs" argument, are we positive Pence's office didn't just make a type on "not one new job"?

Posted by: zeitgeist on February 17, 2010 at 4:48 PM | PERMALINK

Steve I genuinely understand what you are saying. But:

"Not as bad as it could have been"

is a lousy slogan to any one of the 10% of the people that currently doesn't have a job and 10-15% more that are working part time jobs that don't cover even a fraction of their bills.

Until those people start going back to work and until sages start to show some improvement the perception will remain that the stimulus failed.

Posted by: thorin-1 on February 17, 2010 at 4:50 PM | PERMALINK

Could someone address the cost-per-job? I know it's difficult to ascertain, but conservatives have a facile argument that each of those jobs cost $400,000 (divide stimulus bill by number of jobs created). Even if you knock off 1/3 for tax cuts, it still quite a big number to create a single job.

Are their numbers wrong? the 1.2 million number just NEW jobs, not counting jobs that would otherwise have been lost (state employees, etc?). I'm an innumerate American, goddamnit, and I don't really know if 1.2 million jobs is a lot or a little, but $400,000 is a number I can understand.

Posted by: inkadu on February 17, 2010 at 4:52 PM | PERMALINK

Or perhaps he's a few strands short of a fishing net. . .

And, c'mon, inkadu--you're either being a troll or purposefully dense. Measuring the recovery act/stimulus by $$/job is just silly. It wasn't a jobs bill, OK?

Posted by: Michigoose on February 17, 2010 at 4:58 PM | PERMALINK

Can we use this same rationale to say that there's been no net increase in the deficit since Obama took over?

Posted by: skitso on February 17, 2010 at 5:00 PM | PERMALINK

Quite the thing to observe how "Country First" Republicans abhor any actual good news for the country.

(And someone please tell Evan Bayh that Mike Pence may not be the person to whom he wants to turn to cop a soundbite. I saw Bayh's smug mug on the morning news practically purring almost Pence's exact words.)

To thorin-1's comment, I pretty much agree that the reality is Democrats do need to put two chickens in every pot, and do it faster, so to speak. Otherwise, the focus remains on the fact that some pots have chickens and some don't. And that's cold comfort for those who don't. However, millions of jobs officially saved and created is an accomplishment that still needs to be touted and touted loudly, contrasted and contrasted constantly with the Republicans' record of millions of jobs *lost*.

Posted by: June on February 17, 2010 at 5:02 PM | PERMALINK

Yea-boo. Net jobs schmet jobs. Unless Obama can narrow it to a line or two (the GOP narrowed it to one word:NO) this dumbed-down population will never understand what happened (Bushit & Co. caused it, not Obama), how this Stimulus actually is working (or how much better it could have been if the Stimulus was bigger), and why the obstructionism isn't helping the common person that populates the PALINaroundwithterrorist's world.

That a big order. I'd say they should hire the folks that produce those clever E-Trade commercials with that baby as a pitch person to sell the goods. It would be an overwhelming success.

Picture this: Full shot of the baby saying : "man I was almost cleaned-out of my savings by you guys. Good thing Obama was elected" (background has four or five grumbeling baby GOPers whining and crying).

The pitch baby turns to them and says: "Hey fellas, think what we coulda done if your diapers weren't so full of the junk your former boss left"

More crying and whining.

"Hey change those rags and hop aboard. My dad says we may even be able to afford Health care if you do. Oh and stop the whining. Poo, what did I do with that Ora Jell..."

Fade out with "pitch baby" making a face at the crybabies...

Posted by: stevio on February 17, 2010 at 5:07 PM | PERMALINK
this "net job" talk is absurd

Which means that we can expect David Gregory and the rest of the brain dead MSM to start repeating the line and throwing it in the face of every Democrat they interview.

Posted by: John S. on February 17, 2010 at 5:18 PM | PERMALINK

Unless Obama can narrow it to a line or two (the GOP narrowed it to one word:NO) this dumbed-down population will never understand what happened

How much longer do polls need to show that this "dumbed-down population" likes Obama, supports the liberal agenda, and rejects Republicans and conservativism before you people finally acknowledge that maybe they're not so dumb?

Throughout 2008, we were assured that Obama would lose because people are too dumb to understand his nuanced arguments and won't like his lectures. Yet people continued to love his speeches and rejected Republican bumpersticker arguments, and the supposed dum-dums ended up picking Obama by a large margin.

Yet liberals continue to insult them. Curiously, these same liberals seem to believe that Republicans always beat Democrats. So will the train ever leave the 2003 station, or will we always be told that Americans are too dumb to support us? It's like some people can't take "yes" for an answer.

The Media is dumb. The People, not so much.

Posted by: Doctor Biobrain on February 17, 2010 at 5:20 PM | PERMALINK

Michigoose -- If jobs created aren't the metric used to determine the success of the stimulus, we shouldn't be using jobs to prove that the stimulus worked... Of course, when you're arguing against Republicans who say the stimulus didn't create a single job, it's a fair enough point to make. I think it's just context, and I've had that cost-per-jobs question kicking around in my head today.

Posted by: inkadu on February 17, 2010 at 5:23 PM | PERMALINK

@June -

You are correct, reality clearly favors the Democrats on this issue. I know this for a fact working in the auto industry. Cash for Clunkers almost certainly saved my job and a lot of other jobs in the plant I work in. But it did not help the 30% of the workforce we laid off last year and has done little to add back the jobs that were lost.

I can explain until I'm blue in the face all the ways things could have been worse without the stimulus but that won't mean jack to the guy who use to work the assembly line who's been unemployed for 10 months. And yes that even includes the unemployment compensation extentions that have kept a roof over his family's head and food on the table.

He wants a job.

Posted by: thorin-1 on February 17, 2010 at 5:24 PM | PERMALINK

It's now impossible for serious observers to claim the stimulus didn't create new jobs.

(1.6 million jobs) / ($787 billion) = $491,000 per job.
(2.5 million jobs) / ($787 billion) = $314,000 per job.

The jobs cost between $314,000 and $491,000 each. Why can't we just hand people $10,000 each? Or better yet, pay neo-con schmucks to work in reconstruction in Iraq for $250,000/year, they can send their cash back to their families who can spend it.

Posted by: flubber on February 17, 2010 at 5:25 PM | PERMALINK

Dems need to have an economist work through the multiplier effect for the stimulus. it isn't just that it created or saved a certain number of jobs, its that benefits came with those jobs, taxes were paid, the employee spent some of that compensation which allowed goods and services to be bought, whcih increased factory orders, etc.

we need to be able to say "for every dollar of the ARRA that has been spent, N+x dollars of economic activity were created" to show we got a better bang for each buck than the superficial "$400,000 per job" number would suggest. It should be easy to do a back-of-the envelope based on analysts' estimates of what the contraction in GDP would have been without the stimulus divided by $787 billion.

Posted by: zeitgeist on February 17, 2010 at 5:31 PM | PERMALINK

I heard it once said that each new job (in construction) or related fields, goes on to stimulate other jobs like the stores they shop in, perhaps child care etc, so it helps keep people employed in the service and retail industries.
Just reading on Huffington about the new Gov. in Virginia he has stripped the protection against discrimination for gay people.
Wonder how this goes over there!

Posted by: Joan on February 17, 2010 at 5:32 PM | PERMALINK

No, no, "net" is good. In fact, I would encourage Democrats to focus on "net", but to present it by tracing back to the year in which the economy last had as many jobs. Something like, "The stimulus has managed to offset a significant portion of the jobs lost during the Bush Administration, so that we are now at the level of employment we had in 1994, instead of the completely lost decade of jobs growth produced by the Republican policies."

Posted by: Ken on February 17, 2010 at 5:37 PM | PERMALINK

Now I feel kinda dumb. The original post was exactly about countering Republican talking points, so my post of course seems trollish. But thanks, Zeitgeist and Joan for responding seriously. It would be really nice to have a number on economic activity. Who knows how effective it would be. Whomever is in office during an economic downturn gets it when election season rolls around.

Posted by: inkadu on February 17, 2010 at 5:41 PM | PERMALINK

@flubber

You're figures are wrong. The entire $787 billion has not yet been spent. 92.8 billion tax benefits. 74.4 billion contract, grants, and loans. 105 billion entitlements. Some of the money went for loans which IMHO will be paid back.

http://www.recovery.gov/Pages/home.aspx

Using historical unemployment data and this net jobs BS, it appears Bushco did not have a net job created in 8 years. 2/2001 rate was 4.2%. 2/2009 rate was 8.2%. Even under complete republican control from 2001 to 2006, the rate went from 4.2% to 4.5%, therefore no "net jobs" under complete republican control.

http://data.bls.gov/PDQ/servlet/SurveyOutputServlet?series_id=LNS14000000

Posted by: Dave on February 17, 2010 at 5:46 PM | PERMALINK

If jobs created aren't the metric used to determine the success of the stimulus, we shouldn't be using jobs to prove that the stimulus worked...

inkadu - No one's arguing that jobs aren't the metric. The problem is that not all the money was spent on creating jobs. It went towards providing us bridges, helping people without jobs, saving businesses, etc.

It's like if Obama hyped higher test scores and you used the cost of the entire federal budget to determine how much we spent per student, and then tried to argue that students would be better off receiving that money rather than getting smarter. You can do that, but it'd make you an idiot.

Yes, jobs are a good metric; but cost-per-job doesn't work unless we imagine that jobs were the only benefit received. They weren't.

Posted by: Doctor Biobrain on February 17, 2010 at 5:59 PM | PERMALINK

actually, Doctor Biobrain, I did argue jus tthis morning that jobs should not be the metric by which the ARRA is judged, and explained why. I think you and I end up the same place, however.

Posted by: zeitgeist on February 17, 2010 at 6:03 PM | PERMALINK

The question is whether the stimulus cost more jobs (by borrowing from the commercial sector) than it created or saved. The large federal deficit and expectation of higher taxes to come have discouraged entrepreneurs in large and small companies to postpone investment and expansion.

The "net jobs" are the measure of the success of the stimulus package.

Posted by: marketeer on February 17, 2010 at 6:09 PM | PERMALINK

The "net jobs" are the measure of the success of the stimulus package. Posted by: marketeer

Nonsense.

Indeed, to apply your theory about the cost of the stimulus harming investment, you'd also have to do a "netting out" calculation -- between the world with and without a stimulus package. Because my experience working with small businesses is that their lack of investment is not due to fears about how stimulus will be paid for, but rather (a) concerns about lack of present demand or (b) inability to get credit. Given that both of these factors would have been worse without the various stimulus and bailout packages, the correct question remains "how much worse would business investment have been has the economy been allowed to continue its freefall?"

In fact, there has been no "borrowing from the commercial sector" -- the ARRA included massive tax cuts, the pending jobs bill will create tax credits for businesses, and much of the stimulus funding went directly into the hands of private enterprise through contracts for infrastructure construction. where, exactly, is this cost imposed on the commercial sector of which you speak?

Posted by: zeitgeist on February 17, 2010 at 6:15 PM | PERMALINK

If Mr. Pence and the Republican caucus wanted more "net jobs" then they should have supported a stimulus bill so large it would have created more jobs than were lost in the recession, no?

Either way, it's interesting that they are feeling the need to adopt some linguistic sleight-of-hand to avoid out-and-out lying. Perhaps the drumbeat of bloggy and Maddow-y call-outs over stimulus hypocrisy is beginning to shame them into rejoining the reality-based community.

Posted by: Eyescribe on February 17, 2010 at 6:19 PM | PERMALINK

Of course there were no "net" jobs created during the whole time Republicans controlled Washington, from 2001 to 2008. So perhaps the Dems could have done better to pull us out of the mess quicker(A larger stimulus would have been better), but the solution is surely not to put Republicans back in charge so we can have another decade where Wall St makes out like a bandit while regular people tread water or worse.

Posted by: atlliberal on February 17, 2010 at 6:43 PM | PERMALINK
The jobs cost between $314,000 and $491,000 each. Why can't we just hand people $10,000 each?

Because the immediate creation of jobs isn't the sole function of the stimulus (its designed both to create new jobs in the short run and lay the groundwork for better sustained growth in the long run, hence, e.g., the significant focus on infrastructure), and because $10,000 isn't as good as a job paying even federal minimum wage anyway.

Posted by: cmdicely on February 17, 2010 at 6:52 PM | PERMALINK

If the Banana Republicans want to talk about "net" jobs, I say "Bring em on." From February 2001 to January 2009 total non-farm employment rose 1.0 million and private employment fell 663K.

During the same period the civilian non-institutional population over 16 year old grew by 20.6 million.

So let's talk in 2016.

Posted by: Bob on February 17, 2010 at 6:55 PM | PERMALINK

So, exactly how did the government, or these think tanks, measure how many jobs were created? If an entity took X amount of dollars from the stimulus package, do they say all their employees were saved? Or just a certain percent?

I've yet to see anyone describe this in detail.

Also, how do these studies factor out any outside forces that may have led entity Z to add jobs, or save them, or whatever.

Posted by: Joshua on February 17, 2010 at 8:12 PM | PERMALINK

Hi, @Joshua,

In regard to your question, "So, exactly how did the government, or these think tanks, measure how many jobs were created?...I've yet to see anyone describe this in detail." --

From Recovery.gov
http://www.recovery.gov/News/featured/Pages/Calculator.aspx

HOW JOBS ARE CALCULATED
1/15/2010

HOW RECOVERY AWARD RECIPIENTS CALCULATE JOBS

Recipients of Recovery Act contracts, grants, and loans are required to report quarterly on the number of jobs paid for with Recovery funds. The method or formula for calculating jobs was simplified after the first round of recipient reporting.

How did the job estimate guidance change?

The initial guidance captured jobs for a period of time longer than a quarter (February through September). The new guidance captures jobs for a single quarter (e.g., October through December). In addition, the new guidance eliminates the distinction between a job created and a job retained. Jobs are now simply based on the number of hours worked in a quarter that were paid for by Recovery funds.

It does not matter if the hours were worked by a person who was newly hired, a person whose job was saved by the Recovery Act, or a person who is in an existing position that is now being funded by the Recovery Act.

In December 2009, the Office of Management and Budget (OMB) issued the changes in guidance to align with the recommendations of the Government Accountability Office. OMB believes the new formula will help improve the overall quality of recipient reporting.

The Math

If a normal full-time schedule is 40 hours a week, multiply 40 hours x 52 weeks = 2,080 Total Hours per year

Divide 2,080 Total Hours by 4 to equal 520 regular quarterly hours.

If two full-time employees each worked 520 hours (1,040 hours) for the quarter and another half-time employee worked 260 hours, the Total Hours for the three employees is 1300 (520 + 520 + 260 = 1300).

Divide 1300 by 520 to equal 2.5 Recovery funded jobs during that quarter.

Posted by: June on February 18, 2010 at 12:45 AM | PERMALINK

marketeer wrote: "The question is whether the stimulus cost more jobs (by borrowing from the commercial sector) than it created or saved."

Yes, I well recall how the government's demand for funds drove interest rates to stratospheric levels. Except it didn't actually do that, and in fact for quite a while the rate on government bonds was zero (or less than zero when you consider inflation). That means banks and other lenders were happy to lose money by giving it to the government rather than putting it in any other type of investment, whether small business loans, stocks, or commodities.

Posted by: Ken on February 18, 2010 at 9:51 AM | PERMALINK

One year [after the stimulus bill became law], not one net job has been created as unemployment rose from 7.6 percent to nearly 10 percent nationwide. [emphasis added]

Shorter Pence:
"Feh! President Obama hasn't completely reversed the horrific damage my party did to the economy yet. You should elect us instead."

Posted by: toowearyforoutrage on February 18, 2010 at 10:31 AM | PERMALINK
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