Stimulus Jobs Count: CBO Admits It Ignored the Economy’s Actual Performance
Editor’s Note: One of our followers from Twitter sent this to us this morning. Thanks to @USAHipster!
From: The Heritage Foundation
Published on March 23, 2010 by Brian Riedl
If a meteorologist was asked what the day’s high temperature had been, would it be acceptable to simply repeat his/her earlier forecast? Of course not. The forecast was merely a prediction, which should now be replaced with what actually happened.
Yet that is the approach the Congressional Budget Office (CBO) used when declaring that the stimulus had saved 1.5 million jobs. Rather than actually examine the performance of the post-stimulus economy, it essentially re-released its old forecast that the stimulus would likely create jobs.
CBO Confirms Its Methodology
In a recent speech to the National Association of Business Economics, CBO Director Doug Elmendorf confirmed this by stating:
[W]e don’t think one can learn much from watching the evolution of particular components of GDP [gross domestic product] over the last few quarters about the effects of the stimulus … so we fall back on repeating the sort of analysis we did before. And we tried to be very explicit about it that it is essentially repeating the same exercise we did rather than an independent check on it.
When asked if this means that any actual underperformance of the stimulus would fail to show up in the CBO’s stimulus jobs count, Elmendorf replied “That’s right.” This means the 1.5 million jobs saved estimate was pre-determined.
Of course, the stimulus was originally promised to create (not just save) more than 3 million jobs. Instead, the economy has since lost more than 3 million additional net jobs. The abject failure of the stimulus policies recommended by Keynesian economic models should induce some fundamental re-analysis of these models’ assumptions. Instead, the CBO is re-releasing the same jobs analysis–with the same economic assumptions–that they had used a year ago.