Last week, the Council of Economic Advisers of the Executive Office of the President released its quarterly report on The Economic Impact of the American Recovery and Reinvestment Act of 2009.
The numbers are stunning, to say the least. Our federal government has spend $666 billion to date, with another $106 billion that it is obligated to pay but has not yet paid.
And the result? 2.4 million jobs created or saved. Of course “saved,” is in the eye of the beholder. Were those saved jobs ones that needed to be done? We’ll never know. It is also important to know that the 2.4 million jobs were mostly in the public sector, which does little to enhance our economy long-term.
Was it worth it? Of course not. What happens when the construction projects are done, or the stimulus funds run out (think of Milwaukee Public Schools, which “saved” jobs last school year, but is now cutting a bunch of jobs due to lower funding, which includes the lack of stimulus funds)? Most of those jobs were temporarily created or saved.
With $666 billion spent and 2.4 million jobs created or “saved,” that equals a cost to taxpayers of $277,500 per job. We could have cut each of those employees a check for $100,000 instead, and saved taxpayers (ourselves!) $426 billion. Think of all the waste and inefficiencies that created the cost of $277,500 per job. Ridiculous.
It is amazing that there remain many who think if the government throws a ton of money out there, jobs will magically show up. This is a consumption-driven economy. It is spending by people who earn money that drives it. It is a continuous process that is, I have money and spend it on an item that provides an income for someone providing a good or service. That person does the same and the cycle continues. Government throwing out a $1 trillion only dumps it into the economy one time. In the most recent case, for “shovel-ready” construction jobs and bailouts of banks (not a bad thing in and of itself, but not job-creating). Further, stiffing bondholders while bailing out GM (i.e. the UAW) does violence to contract law, I would think.
The only manner in which we get out of this current economic mess is to 1) provide some amount of economic and regulatory certainty and 2) get money back into the hands of consumers.