Stimulust: Creating Jobs At $4.1 Million A Pop
The Obama administration’s American Recovery and Reinvestment Act (ARRA/aka The Stimulus) has indeed packed one heck of a wallop, although not exactly the type being perpetually hyped and hawked by The One. Far from it. This from last month’s Congressional Budget Office report:
When ARRA was being considered, the Congressional Budget Office (CBO) and the staff of the Joint Committee on Taxation estimated that it would increase budget deficits by $787 billion between fiscal years 2009 and 2019. CBO now estimates that the total impact over the 2009–2019 period will amount to about $831 billion. By CBO’s estimate, close to half of that impact occurred in fiscal year 2010, and more than 90 percent of ARRA’s budgetary impact was realized by the end of March 2012.
…
CBO has estimated the law’s impact on employment and economic output using evidence about the effects of previous similar policies and drawing on various mathematical models that represent the workings of the economy. On that basis, CBO estimates that ARRA’s policies had the following effects in the first quarter of calendar year 2012 compared with what would have occurred otherwise:
~ They raised real (inflation-adjusted) gross domestic product (GDP) by between 0.1 percent and 1.0 percent,
~ They lowered the unemployment rate by between 0.1 percentage points and 0.8 percentage points,
~ They increased the number of people employed by between 0.2 million and 1.5 million,
~ They increased the number of full-time-equivalent jobs by 0.3 million to 1.9 million. (Increases in FTE jobs include shifts from part-time to full-time work or overtime and are thus generally larger than increases in the number of employed workers.)
The key take-away from those numbers, as James Pethokoukis notes over at the Enterprise Blog, “OK, so without the stimulus, there would be anywhere from 200,000 to 1.5 million fewer people employed right now? That means the current cost-per-job created is somewhere between $4.1 million and $540,000.”
But wait, there’s more. The long-term impact of the stimulus, from the CBO’s perspective:
In contrast to its positive near-term macroeconomic effects, ARRA will reduce output slightly in the long run, CBO estimates—by between zero and 0.2 percent after 2016. But CBO expects that the legislation will have no long-term effects on employment because the U.S. economy will have a high rate of use of its labor resources in the long run.
ARRA’s long-run impact on the economy will stem primarily from the resulting increase in government debt. To the extent that people hold their wealth in government securities rather than in a form that can be used to finance private investment, the increased debt tends to reduce the stock of productive private capital. In the long run, each dollar of additional debt crowds out about a third of a dollar’s worth of private domestic capital, CBO estimates.
$831 billion in additional debt; zero long-run employment and economic impact; reduced stock of productive private capital.
Wonderful.
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