Stimulus

Fact-Checking the Fact Checkers: Is Rick Perry Wrong To Say That the Stimulus Created Zero Jobs?

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Old job-eroo.

How many jobs did the stimulus create? At Monday's GOP presidential debate, Texas Gov. Rick Perry said the number was zero, zilch, zip, nada, goose-egg. The fact-checkers at CNN say he's wrong.

Texas Gov. Rick Perry said at Monday's CNN/Tea Party Debate that President Obama "had $800 billion worth of stimulus in the first round of stimulus. It created zero jobs. Four-hundred-plus billion in this package, and I can do the math on that one. Half of zero jobs is going to be zero jobs."

The Facts:

A more accurate jobs count may come from the nonpartisan Congressional Budget Office, which estimates the American Recovery and Reinvestment Act, also known as the stimulus bill, "increased the number of people employed by between 1.4 million and 3.3 million" in the second quarter of 2010 alone.

Perry's wrong. But the CBO estimate that CNN points to doesn't provide anything like an "accurate jobs count."

As I've previously pointed out here, here, here, here, and here, the CBO's job-creation estimates don't actually give us a reliable idea of how many jobs the stimulus created, because the agency isn't actually counting the jobs. Instead, it's rerunning the same multiplier-based economic model it initially used to estimate that the law would create jobs, slightly adjusted for differences in how the money's being spent.

All thumbs.

As CBO director Doug Elmendorf has explained, the agency's reports do not constitute an independent check on those initial, pre-stimulus estimates. In a response to question at a March, 2010 presentation, Elmendorf confirmed that "if the stimulus bill did not do what it was originally forecast to do, then that would not have been detected by the subsequent analysis."

So if the stimulus created tens of millions of jobs, or if it created none at all, the CBO's reports wouldn't tell us either way.

Perry, however, is still wrong. While we don't know exactly how many jobs the stimulus has created, we do have independently reported, on-the-ground data that tells us that the stimulus created some full-time jobs and some part-time work. In my column today, I wrote about a survey of businesses that received stimulus funds. The survey was conducted by Dan Rothschild and Garett Jones of the Mercatus Center. Rothschild, who's now at the American Enterprise Institute, led a team of interviewers who talked with managers at those firms. Here's the first case they share from those interviews:

Let's begin with a success story. The owner of a construction engineering firm told our team that ARRA is ?the only reason our doors are still open. He didn't suggest having to sacrifice quality in order to meet the ARRA's strict deadlines. (Our interview teams rarely asked specifically about the quality-speed tradeoff, but many interviewees brought up the issue themselves). And because of ARRA, his small firm grew by about 20 workers, of which 6 had been brought off of unemployment.  

Thus, ARRA saved his firm, he found good-quality workers quickly, and he worked on a project that seemed to be no different than the usual federal construction project. That is what a success story looks like, and this is about as good a story as we found.  

Of course, the stimulus also funded make-work for tile layers, short-term project positions that were reported as "jobs created" despite existing for only a few weeks or months, and salaries that ended up being used to rehire retired employees who were already receiving pensions and were presumably not actively seeking employment. But along the way, it clearly created some number of full-time jobs as well.