Economy: Federal Watchdog Can't Vouch For Administration Job Numbers
• "The government watchdog overseeing the federal stimulus program testified Thursday that he could not vouch for the Obama administration's recent claims that the money had saved or created 640,000 jobs. He suggested that the administration should have treated the number with more skepticism," the New York Times reports. "Earl E. Devaney, the chairman of the Recovery Accountability and Transparency Board, said... up to 10 percent of the recipients had not filed the required reports showing how many jobs they had created or saved."
• "As he readies an overhaul of the nation's financial regulatory system, House Financial Services Chairman Barney Frank," D-Mass., "is already looking at avenues to revise the package before it goes to the floor the week of Dec. 7," CongressDailyAM (subscription) reports. "At the top of the list is revisiting language his panel approved Thursday that would give sweeping powers to the GAO to audit the Federal Reserve."
Is job creation the best way to measure whether the Obama administration's economic plan is working? Obama has promised to create "or save" at least 3 million jobs by 2011, but an analysis [PDF] by the Obama team estimates job losses of 3 to 4 million without action. Does that commit Obama to roughly reaching current levels of employment by 2011? Is the analysis correct to estimate 3.7% GDP growth from his $775 billion plan? Is the analysis, by Christina Romer and Jared Bernstein, reasonable in its estimates of the growth effects of spending, versus tax cuts and other options?
-- John Maggs, NationalJournal.com
Responded on January 12, 2009 10:31 AM
J.D. Foster , Senior Economist, the Heritage Foundation
Job gains or losses are an imperfect metric for gauging economic performance, for the same reasons the group tasked with deciding when recessions begin and end consider a wider array of economic data. However, the political process and the American people are accustomed to employment data such as the unemployment rate and changes in the level of employment, and these serve reasonably well approximating the overall state of the economy, especially when referring to changes in private sector employment. This focus on private-sector employment is especially important in the context of President-elect Obama's jobs claim. This claim ought to be understood to relate solely to private employment, excluding any change in the number of Americans working for the government. Government workers often perform valuable services, and no demeaning of their contributions is intended. But the private sector supports through their taxes the jobs of government workers. So the relevant measure of the economy ought to reflect only pri...
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Job gains or losses are an imperfect metric for gauging economic performance, for the same reasons the group tasked with deciding when recessions begin and end consider a wider array of economic data. However, the political process and the American people are accustomed to employment data such as the unemployment rate and changes in the level of employment, and these serve reasonably well approximating the overall state of the economy, especially when referring to changes in private sector employment.
This focus on private-sector employment is especially important in the context of President-elect Obama's jobs claim. This claim ought to be understood to relate solely to private employment, excluding any change in the number of Americans working for the government. Government workers often perform valuable services, and no demeaning of their contributions is intended. But the private sector supports through their taxes the jobs of government workers. So the relevant measure of the economy ought to reflect only private sector jobs.
That said, it would be the height of cynisism to suggest that President-elect Obama means anything but that private-sector employment will be millions of jobs higher than it is today if his plan is implemented. No one could credibly measure what employment would be in the absence of one stimulus plan or another. And so no one should suggest that President-elect Obama does not intend to be held accountable for the results of his plan, which would imply private, non-farm employment somewhere between 139 and 140 million by the end of 2010.
Unfortunately, the Obama stimulus plan as currently envisioned has little chance of creating a net of 3,000 private-sector jobs, let alone 3 million or more. Another half trillion dollars of deficit spending or more on top of the 2 trillion or so already expected for the next two years is hardly a prescription for economic recovery, but for an unproductive and massive increase in the national debt. So the President-elect should be given credit for being clear about his goal, the benefit of the doubt that his words mean plainly what they imply, and fair warning that his plan as described cannot achieve his goal.
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