The errors on Recovery.gov, which looks more like clerical errors, is not the real problem. And it’s not even the tip of the iceberg when it comes to the gross manipulation of ‘jobs’ data that the Obama administration is engaging in.
First, they rigged the game right from the beginning by including ‘jobs saved’ as a metric - something that is impossible to measure. For example, let’s say a school is facing a $500,000 shortfall. That’s ten teacher salaries, or the cost of a new gymnasium renovation. The school planned on the renovation, and had no intention of firing any teachers, but now can’t do it. But wait! All they have to do is claim that they can save ten teacher jobs, and they can get stimulus money. So, they get the money, report that 10 teachers salaries were saved, and they get their gym reno. The jobs were never at risk in the first place, but the books were cooked to make it look that way.
This is not a small factor. Any organization that was planning on any kind of budget cut could claim that jobs were ‘saved’, even if the jobs were never at risk. Just decide, <wink wink> that you need whatever you had planned to buy more than you need the teachers. So we have absolutely no idea how many real jobs, if any, were actually saved.
Then, they set up an incentive system that encourages everyone who gets government money to over-state the number of jobs that were created. Then, because the big numbers make their case look better, they passed those numbers straight on to the public without really doing any checking into their veracity. Now they’ve been caught at it, and they’re madly ‘revisiting’ and downsizing their jobs estimates.
But the worst fallacy about the ‘jobs created’ statistic is that it doesn’t even consider jobs that may have displaced private sector jobs, any negative effects from borrowing a trillion dollars (crowding out private capital, devaluing the dollar, increasing uncertainty about the future, private reductions in investment due to the permanent income theory).
Consider this: my company bids for a job that will employ five workers. I lose the contract to another entity that underbid me because they got stimulus money, or perhaps I was going to be doing a job for the government, but now they’ve decided to hire within because they got stimulus money. No net jobs were created - five workers were needed no matter which ones got hired - but by the crazy accounting of the Obama administration’s plan, five jobs were ‘created’ by the stimulus.
Economists also agree that you can’t simply borrow 800 billion dollars without it having some immediate effect on the economy. The permanent income hypothesis says that economic actors plan their decisions not on their current income, but on their estimate of what their future income will be. Businesses know that this money is coming back out of the economy in the form of higher taxes in the future, so they cut back now. If the borrowing is high enough to destabilize the dollar, then we have more negative effects. If the government demand for capital crowds out private demand, it constrains investment in the private sector.
Then there’s the uncertainty injected into the economy. No one knows where or when the stimulus money will land, so businesses find it harder to make future plans. Venture capitalists scale back their investments because the risk premium has increased.
The effects of all this are real, but impossible to quantify. But the Obama administration assigns a cost of ZERO jobs on the other side of the balance sheet. By their logic, if they taxed every dollar out of the private sector and spent it in the public sector, they would create millions and millions of new jobs. But I guess they’d be completely confused as to how job creation can be going so swimmingly while the unemployment rate continues to climb. A real conundrum, that.