Sunday, August 7, 2011

George Will Misleads on the Stimulus

On Sunday, August 7, 2011 ABC’s Sunday morning news show, This Week featured a roundtable discussion on the politics of the economy. During the discussion George Will stated,

It’s pretty clear what won’t work.  We’ve had a stimulus. There are now 2 million more people unemployed than there were when the stimulus was passed. We now have a record one in seven American households on food stamps. We have wagered this economy on a mistaken view of the multiplier effect of federal dollars spent to create jobs. It didn’t work, let’s try something else. 

Will is clearly implying that the stimulus either caused job looses or failed to create jobs. That is not true. Analysts have repeatedly found that the stimulus saved or created millions of jobs.

The non-partisan Congressional Budget Office found that, as of the first quarter of 2011, the stimulus increased the number of people employed by between 1.2 million and 3.3 million than if the stimulus hadn’t been passed.  

Various private organizations have looked into the issue as well. The President’s Council of Economic Advisors listed the assessments of private organizations on how many jobs the stimulus saved or created as of the first quarter of 2011.

            IHS/Global Insight:                      2.43 million jobs saved or created
            Macroeconomic Advisers:          2.48 million jobs saved or created
            Moody’s              2.47 million jobs saved or created

Some may object to using jobs that were saved in the total, but those jobs wouldn’t have been with us had the stimulus not been passed.

The other primary criticism from conservatives on these analyses is the methodology of using specific multipliers in their calculations. The idea behind multipliers themselves is basic macroeconomics. When money is spent, a portion of that money is saved by the seller of a good and a portion is spent. That spent money stimulates economic growth and a portion of it is spent again, and so on, until all the money is saved by one person or another. Conservatives often think that these agencies are overestimating the size of the multiplier effect. But when multiple expert organizations, public and private, agree on multipliers of approximately the same size, I think they know what they are talking about.

The stimulus did work. It saved or created millions of jobs. It was also incredibly expensive. The CBO projects that it will cost 814 Billion dollars. If conservatives wish to say that the gains in employment and economic growth aren’t worth the cost of the stimulus, that’s fine. But they cannot say that it didn’t work or that it didn’t create jobs.

To her credit, Cokie Roberts confronted Will’s mischaracterization of the stimulus.

Right now the unemployment numbers are very much boosted by state and local governments laying off people because they no longer have the stimulus to pay them with.

Unfortunately the take away from this exchange for the average audience member is that there is a legitimate dispute on whether the stimulus created jobs. There isn’t, and ABC’s audience deserves to know it.

P.S. Fox News has been the primary purveyor of Stimulus misinformation. Media Matters has documented this countless times.

Originallly Written August 7, 2011

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