MEMORANDUM FOR INTERESTED PARTIES

From:  Jeff Berkowitz, Research Director

RE:      Today’s White House “Trick or Treat” Jobs Report

Date:   Friday, October 30, 2009

Today, the White House will report an estimate of “jobs created or saved” from state governments and nonprofits as a result of President Obama’s $787 billion stimulus package. Since this report will come just a day before Halloween, one should be very cautious in determining whether it contains a trick or a treat. 

 Just yesterday, The Associated Press reported that a previous stimulus job count from the White House was a trick that “overstated by thousands” the number of jobs created or saved with federal stimulus contracts.  In fact, the AP noted, “some counts were more than 10 times as high as the actual number of jobs.”

Today’s release from the White House will be the fourth job report in the last two months. With a pattern of these White House “jobs created or saved” reports being published in close proximity to releases of real data from the U.S. Bureau of Labor Statistics (showing continuing job loss and rising unemployment), it is clear the Obama Administration is trying to cover up economic reality by manufacturing job numbers out of thin air. Even though the White House is scared of reality, they’re not afraid to fight hard to ignore it. Obama’s top aide overseeing the stimulus attacked yesterday’s Associated Press story as “misleading.” But as this memo will outline, it’s the Obama Administration that has been misleading the American people as these White House reports have been fraught with errors and the job estimates are questionable at best.

The “Job Created Or Saved” Fantasy

The Obama Administration’s use of the phrase “created or saved” has allowed them to avoid economic reality. Harvard economist Greg Mankiw called the phrase an act of “political genius”:

“So [Obama] gave us a non-measurable metric. A clear and specific benchmark, without any way of ever knowing whether it has been reached.”

Before the stimulus was passed, the Obama Administration was selling their $787 billion economic experiment by predicting millions of jobs “created or saved.” In January, Christina Romer (Obama’s chief economic adviser) and Jared Bernstein (Vice President Joe Biden’s economic adviser) released a report predicting that the stimulus would create 3.7 million jobs over two years. Their guesses did not stand up to scrutiny by the experts. Economist Gary Becker said the estimates produced in the report were “excessive.”  The Heritage Foundation has warned the “report should not be relied upon as an accurate measure of the impact of the Obama fiscal stimulus plan because it relies on rules of thumb and other back-of-the envelope calculations rather than sound economic analysis.”

After the stimulus passed, the Obama Administration continued their deceptive job counting. In May, The Associated Press called the Obama Administration’s claim that the stimulus had saved 150,000 jobs “a figure … so murky it can never be verified.”  Romer admitted that the job counts are not exact, telling CNBC: “It’s very hard to say exactly – you don’t know what the baseline is.”

When Republicans cried foul over these job estimates, the non-partisan Factcheck.org assessed Republican concerns:

A Republican Party Web site classifies as "fiction" the president’s repeated claim that the spending already has "saved or created" a total of 150,000 jobs, and accuses him of "fuzzy math." The GOP has a point here.  The fact is the economy has lost more jobs, and the unemployment rate is significantly higher, than the administration originally predicted would be the case if Washington did nothing. In fact, the original projections of Obama’s economic aides have turned out to be off by a very wide margin.

After the summer passed, the Obama Administration did not stop using the same misleading job counting methods to pretend that their economic experiment was working. On September 10, Obama’s Council of Economic Advisers reported that the stimulus had created 600,000 to 1.1 million jobs. But when you read through the rest of the report, the CEA admits: “Any estimates of the impact of the ARRA at this early stage must therefore be regarded as preliminary and understood to be subject to considerable uncertainty.”

What is quite certain is that since the stimulus passed in February, over 2.6 million American jobs have been lost. The Obama Administration is either living in a fantasy world or using these reports to have a public argument with the facts.  In either case, it is clear that President Obama’s stimulus has failed our economy and the American people.

Blunders And Errors Abound

Two weeks ago, the Obama Administration reported that the stimulus had created 30,383 jobs from federal stimulus contracts.  We soon learned that this report was full of inaccuracies, which the Government Accountability Office predicted would happen:

This unprecedented level of detailed information to be reported by a large number of recipients into a new centralized reporting system raises possible risk for the quality and reliability of these data.

Errors ranging from the size of grants companies received to more serious errors regarding how jobs were counted have emerged. Yesterday’s Associated Press story cited a Georgia community college claim that 280 jobs created with stimulus money when in fact none were created from stimulus spending, as well as a Florida child care center count of 129 saved jobs that actually used stimulus funds for “raises for existing employees.”  Stimulus funds going to raises when millions of Americans have lost their jobs is as outrageous as the Recovery Act signing off on AIG bonuses.

Another prime example of some of the errors contained in the stimulus job report came from southwest Missouri, where the Springfield News-Leader reported a diving company received stimulus dollars to work on a project.  According to federal documents prepared by the Obama Administration, the project “created or saved” 7.5 jobs. What the report doesn’t mention is that those jobs were only good for 4 days.

Another example comes from Washington State, where the White House claimed their stimulus created 2,183 jobs as a result of a project to clean up a nuclear-weapons site. However, many of those jobs would have been created anyways because the project was underway prior to the stimulus. So the stimulus neither created nor saved those jobs. 

A Guessing Game 

Last week, the Obama Administration released yet another report claiming that stimulus saved 250,000 education jobs. But as The Washington Post noted, the White House did not “address how many education jobs have been cut this year because of the recession, nor does it project how many are in jeopardy in the coming year.”

The reality is that since the stimulus was passed in February, the U.S. has lost over 150,000 education jobs.  When asked about the specifics regarding the number of education jobs the stimulus has saved, state education departments have had a difficult time providing answers. Carol Bingham, director of fiscal policy for the California Department of Education said that providing an exact count of saved jobs is almost impossible and admitted that the job count will “end up being an estimate.”

The Obama Administration is essentially forcing states to make a wild guess as to how many jobs were “created or saved” by the stimulus. This problem arises from the fact that states are allowed to take liberties with the way they count jobs created by the stimulus. The News- Leader reported that a spokesperson for a federal agency overseeing the stimulus has indicated that jobs created by the stimulus “do not have to be permanent full-time jobs,” even though the President, Vice President and Administration officials regularly imply that these jobs are exactly that.  In addition, The Wall Street Journal reported that when asked to provide information on the number of jobs created through federal stimulus contracts, contractors were not asked to differentiate between whether a job was created or saved and were allowed to use “ their best guess” on whether the stimulus saved jobs.   

What To Watch For Today

Whatever stimulus job estimates the Obama Administration releases today, the facts show that their numbers cannot be trusted. The White House’s estimates have included “saved jobs” that were never in danger of being lost, partial jobs, or simply wild guesses. As Romer stated, “Inherently, we’re always going to have to be in a world of estimating.” 

But Americans are not interested in rosy White House estimates. They are interested in what President Obama and the Democrat-controlled Congress will do to grow our economy and created jobs. In February, Obama claimed that the “federal government is the only entity left with the resources to jolt our economy back to life.”  With over 2.6 million jobs lost since the stimulus was passed, and the unemployment rate at 9.8 percent, it is clear that government is not providing the “jolt” our economy needs to come “back to life.”  As two Harvard economists concluded in a recent National Bureau of Economic Research paper, President Obama would have given the economy a better jolt by providing tax relief, empowering American families and businesses instead of the federal government to restore and grow the economy.

What is even more disturbing than the Obama Administration’s completely misleading job estimates are the policies their pushing that will do more harm to our economy: a government-run health care experiment with hundreds of billions in taxes that will kill jobs, a national energy tax that will kill jobs, and the so-called “Employee Free Choice Act” that will kill jobs. President Obama is not interested in creating or saving any jobs; he is set on an agenda that will have government take over and experiment with our economy, our health care, our energy and other parts of our lives. So while his administration continues to cover up economic reality, we must stop his attempts to make that reality even worse.