The right-wing media are promoting a claim made by a Weekly Standard writer that the stimulus has “cost $278,000 per job.” However, simply dividing the amount of money spent by the number of jobs created is, according to an Associated Press fact check, “highly misleading,” and economist and Nobel laureate Paul Krugman has called this math “bogus.”
Right-Wing Media Repeat Weekly Standard's Misleading Claim
The Weekly Standard: " 'Stimulus' Has Cost $278,000 Per Job." From a July 3 Weekly Standard blog post by Jeffrey H. Anderson, headlined “Obama's Economists: 'Stimulus' Has Cost $278,000 per Job”:
When the Obama administration releases a report on the Friday before a long weekend, it's clearly not trying to draw attention to the report's contents. Sure enough, the “Seventh Quarterly Report” on the economic impact of the “stimulus,” released on Friday, July 1, provides further evidence that President Obama's economic “stimulus” did very little, if anything, to stimulate the economy, and a whole lot to stimulate the debt.
The report was written by the White House's Council of Economic Advisors, a group of three economists who were all handpicked by Obama, and it chronicles the alleged success of the “stimulus” in adding or saving jobs. The council reports that, using “mainstream estimates of economic multipliers for the effects of fiscal stimulus” (which it describes as a “natural way to estimate the effects of” the legislation), the “stimulus” has added or saved just under 2.4 million jobs -- whether private or public -- at a cost (to date) of $666 billion. That's a cost to taxpayers of $278,000 per job. [The Weekly Standard, 7/3/11]
Fox & Friends: Each Of The Jobs Created By Stimulus “Cost An Average Of $278,000 Per Job.” From the July 5 edition of Fox News' Fox & Friends:
STEVE DOOCY (co-host): According to the White House Council of Economic Advisers -- they've come out with their seventh quarterly report. And what it says is that the stimulus -- remember, it was going to save us from big unemployment --
DANA PERINO (guest co-host): Save or create 3 million jobs.
DOOCY: Yeah. It was going to do that. It didn't do that. And of the jobs it did save or create, each of those jobs cost an average of $278,000 per job. [Fox News, Fox & Friends, 7/5/11]
MichelleMalkin.com Highlights The Weekly Standard's Claim. From a July 3 post by Doug Powers on MichelleMalkin.com:
As Jeffrey Anderson at the Weekly Standard pointed out, the White House releasing a fiscal report on the Friday before a long holiday weekend can only mean one thing: There's not much good news in it for the White House, and, ergo, taxpayers.
Such is the case with the White House Council of Economic Advisors' seventh quarterly report on the impact of the “stimulus”:
The council reports that, using “mainstream estimates of economic multipliers for the effects of fiscal stimulus” (which it describes as a “natural way to estimate the effects of” the legislation), the “stimulus” has added or saved just under 2.4 million jobs -- whether private or public -- at a cost (to date) of $666 billion. That's a cost to taxpayers of $278,000 per job. [MichelleMalkin.com, 7/3/11]
Hoft: “The Obama White House Admitted This Week That The Bogus Stimulus Cost $278,000 Per Job.” In a July 3 post on his blog Gateway Pundit, Jim Hoft quoted The Weekly Standard's claim and wrote, “The Obama White House admitted this week that the bogus stimulus cost $278,000 per job.” [TheGatewayPundit.com, 7/3/11]
Right-Wing Media Made Similar Misleading Attacks On Stimulus In 2009
“Highly Misleading” Math Does Not Convey Full Impact Of Stimulus
AP: "[M]ath Is Satisfyingly Simple But Highly Misleading." In 2009, the Associated Press published a “fact check” reviewing similar claims being made at the time:
Beware the math. Some Republican lawmakers critical of President Barack Obama's stimulus package are using grade-school arithmetic to size up costs and consequences of all that spending. The math is satisfyingly simple but highly misleading.
It goes like this: Divide the stimulus money spent so far by the estimated number of jobs saved or created. That produces a rather frightening figure on how much money taxpayers are spending for each job.
The reality is more complex.
First, the naysayers' calculations ignore the value of the work produced.
Any cost-per-job figure pays not just for the worker, but for material, supplies and that worker's output -- a portion of a road paved, patients treated in a health clinic, goods shipped from a factory floor, railroad tracks laid.
Second, critics are counting the total cost of contracts that will fuel work for months or years and dividing that by the number of jobs produced only to date.
A construction project, for one, may only require a few engineers to get going, with the work force to swell as ground is broken and building accelerates.
Hundreds of such projects have been on the books, in which the full value of the contracts is already counted in the spending totals, but few or no jobs have been reported yet because the work is only getting started.
To flip the equation politically, it's as if the 10-year cost of George W. Bush's big tax cuts were compared with the benefits to the economy that only accrued during the first year.
Third, the package approved by Congress is aimed at more than direct job creation, although employment was certainly central to its promotion and purpose.
Its features include money for research, training, plant equipment, extended unemployment benefits, credit assistance for businesses and more -- spending meant to pay off over time but impossible to judge in a short-term job formula.
Nor do the estimates made Friday include indirect employment already created by the package -- difficult if not impossible to measure. [AP, 11/2/09, via Nexis]
Krugman Called Claim That Stimulus Would Cost $275,000 Per Job “Bogus.” Paul Krugman, a Nobel Prize-winning economist, responded to similar claims in his New York Times column in 2009:
First, there's the bogus talking point that the Obama plan will cost $275,000 per job created. Why is it bogus? Because it involves taking the cost of a plan that will extend over several years, creating millions of jobs each year, and dividing it by the jobs created in just one of those years.
It's as if an opponent of the school lunch program were to take an estimate of the cost of that program over the next five years, then divide it by the number of lunches provided in just one of those years, and assert that the program was hugely wasteful, because it cost $13 per lunch. (The actual cost of a free school lunch, by the way, is $2.57.)
The true cost per job of the Obama plan will probably be closer to $100,000 than $275,000 -- and the net cost will be as little as $60,000 once you take into account the fact that a stronger economy means higher tax receipts. [The New York Times, 1/25/09]