Obamanomics: $306,000 To Save One Job

The Obama Transition Team published a report on the number of jobs that could be created “or saved” by the assortment of subsidies and programs included in Obama’s massive “stimulus” package.

obamanomics-306k-per-job

The authors, through a series of assumptions, estimates, projections, and guesses, purport to compute the total at 3,675,000 jobs.  They even included figures by industry.  For example, 499,000 jobs would be created or saved in the Leisure and Hospitality Industry – not 500,000 or 498,000.

One might get the impression from the headlines and the precise figures  that the authors are such brilliant economists they actually know, in advance, exactly how many people will get new jobs, and which industries will hire them.  Indeed, In his weekly Internet/radio address President-elect Obama claimed:

“The report confirms that our plan will likely save or create three to four million jobs. 90 percent of these jobs will be created in the private sector – the remaining 10 percent are mainly public sector jobs we save, like the teachers, police officers, firefighters and others who provide vital services in our communities.”

The key word in this sentence, “confirms,” is a deliberate deception. The reports’ authors, unwilling to “confirm” anything,  wrote five explicit disclaimers into the report.

  • “It should be understood that all of the estimates presented in this memo are subject to significant margins of error.
  • “There is the obvious uncertainty that comes from modeling a hypothetical package rather than the final legislation passed by the Congress. But, there is the more fundamental uncertainty that comes with any estimate of the effects of a program.”
  • “Our estimates of economic relationships and rules of thumb are derived from historical experience and so will not apply exactly in any given episode. Furthermore, the uncertainty is surely higher than normal now because the current recession is unusual both in its fundamental causes and its severity.”
  • “…there is considerable uncertainty in our estimates: both the impact of the package on GDP and the relationship between higher GDP and job creation are hard to estimate precisely.”
  • “It is important to note that the jobs effects of temporary broad-based tax cuts would probably be considerably smaller.”

Considering all this slippery language the only reasonable conclusion is the report’s authors have no idea how many jobs, if any, the government might cause to be created  by spending all this money.

Further, the report follows Obama’s lead in using  the phrase “save or create,” rather than “create.”  As we previously reported the new President is setting up the media-political establishment to judge his economic policies as successful based on the number of jobs he will claim to have “saved,” rather than by the traditional measure, applied to past Presidents,  how many additional jobs were added to the economy during his term.

The unvarnished truth is the Obama team has no idea how many jobs will exist in two years, with or without all this spending.  On the other hand, here are some knowable numbers:

  • The Obama stimulus plan, plus the bailout funds that will be placed on the President’s desk next week add up to $1.125 Trillion, the largest political slush fund in the history of the world.
  • If the Obama team’s dubious estimate of “jobs created or saved” turned out to be correct, the cost would be $306,000 per job.
  • $1.125 Trillion is enough to simply hand a cash gift of $102,000 to each of the 11 million Americans now unemployed.
  • Mortgage defaults and foreclosures brought on the current crisis and Credit Suisse estimates there will be 8 – 10 million more foreclosures over the next four years.   According to Equifax, the average mortgage balance in the US is about $109,000.  Thus, $1.125 Trillion could pay off all those troubled mortgages, reducing foreclosures over the next four years to zero.


10 Comments so far

  1. theCL on January 16th, 2009

    $1.125 Trillion that your children and grandchildren will have to cough up!

    What a nice and “caring” thing to do for the children … lay on their shoulders an insurmountable amount of debt!

    More and more I’m starting to believe it will actually happen … the next civil war, will be a generational war. You can’t keep piling taxes on top of younger people and expect them to take it silently.

    Mark my words … trouble is brewing.

  2. Sharon on January 16th, 2009

    We have to do something. We can’t just let the whole economy slide into the sewer! We could have 50% unemployment. 50 million people on the streets homeless.

    You conservatives are always eager to go into debt for a war. Or for oil. Never for people. Why is that?

  3. aaa again on January 16th, 2009

    That’s just incredibly silly, Sharon.

    “We” have to do something??? Who is “we,” kemosabe?? Only the majority taxpayers will pay. That means the rich. They pay the tax load now, and in the future. They are going to bail out the country. Not you. You will leach off them.

    Same as it ever was. By the way, you are welcome.

    And please, 50% unemployment. Would you care to explain to us how you arrived at that statistic?
    Perhaps fresh off of Henny-Penny.com?

  4. aaa again on January 16th, 2009

    I was jest-a-thinkin’, peoples. The government says $306K a job. Hmmm. So it will take $306K to create a job. Wow. That’s quite a concept.

    I’ve got an alternative proposal. How ’bout we do some math.

    So I’m thinkin.’ Ya-see 200 working nights a year. OK? Just 200 nights. You see, I want our employees to have plenty of “rest and recovery time,” right?? (I want them really on their game when working.) And $1000 a night we pay them. That’s a salary of $200K per year. Sweet!!

    Now, not to be discriminatory, but I just want employment candidates to be smart, beautiful and dedicated to the craft…..and female. You know, I’m really behind affirmative action.

    So the way I see it, the government pays a $200K salary to, uh, “government service employees” for me to have….well, you know….”good company” 200 nights a year. Goooooood company. And the country – not to mention aaa – is “stimulated.” And……..we save $106K per “job” created. Now this is good government in action. Am I smart or what? Everyone is happy! Jobs, jobs, jobs..so to speak !!! Cheaper, better, funner !!!!

    Think this is absurd????? Just watch what the actual “stimulus” money actually goes for……and then come back and tell me who proposed a better use.

    Sorry, boomer, but you know me……

  5. Sharon on January 17th, 2009

    aaa again

    Real people are suffering all over this country. Maybe your job isnt at risk….yet. But millions of people are worried. And millions have already lost their jobs and can’t find another job.

    You can make sexist jokes but you don’t know what to do to stop the bleeding, do you? Obama at least has a plan and is willing to do something. Conservatives never want to do anything to help people in trouble.

    I shop at Myrvens. They closed. I shop at Gottshalks and they went bankrupt yesterday. My friend works at Circuit City and their closing soon. This is scary!

    What jobs are men going to do while women work for 2000 nights?

  6. Sarah Livingston on January 17th, 2009

    Sharon- whose fault is it those stores closed?

    you don’t understand that liberals like Obama are the cause of these crises. You should be reading the posts on this site.

    Obama and the liberals are planning to throw away 800 billion dollars on pork and government waste. Do you know how many new small businesses could start up for that kind of money?

    Do you think those stores will open up again because the liberals dumped $800 billion down one of their money pits?

    I’ve been trying to start a business for two years and its hard. Its hard work. These liberals don’t know what work is. All they do is use other peoples money to waste on stupid progams that do no good.

    You need to get educated Sharon.

  7. aaa again on January 17th, 2009

    Sharon –

    “What jobs are men going to do while women work for 2000 nights?”

    Well, depending on their preference, the men will, ahem, either be on top or bottom of those women.

    C’mon, Sharon. Lighten up. It was an intentionally absurd proposal to parody what is in my opinion, a similarly absurd government stimulus program.

    Look, of course “real” people are hurting. (By the way, where are those “unreal” people?? This isn’t invasion of the body snatchers is it??) But running around talking 50% unemployment and claiming “at least Obama has a plan” and “conservatives don’t care” is ill thought out populist nonsense. This is about legitimate policy differences between liberals and conservatives, not “who cares.”

    I would appeal to you to continue to read the essays of Mr Boomerjeff, who does a very good job of laying out facts and historical precedent on this subject.

    I would also suggest that you first understand the origins of the current mess before you suggest solutions, or buy into some smooth talking politician’s suggestions. Scanning some of the historical essays on this very sight would be a good start. In addition, one of the best books I have ever read would be a good start: The World is Curved by Davis Shmick.

    Lastly, you asked if I had a solution. Yes. In broad strokes:

    1) Only one industry should receive “bailout money,” The commercial banks. And it should be in the form of equity capital to keep them solvent and functioning. (Not buying bad loans.) Why the banks? They are the financial “blood” that makes the economic “body” function. They have a special role. The current problem is a liquidity crisis. You gotta fix that. This would effectively “nationalize” them. I would say that several years down the road the government resell those shares and reprivatize the banks.

    2) Let all other industry reorganize itself without government intervention. It might be painful, but it will come quickest this way. For historical precedent, look at 1980-1982 and RR’s refusal to adopt Japan-like central planning and support.

    3) Reduce marginal tax rates across the board. The only entities not hurting or shrinking are government ones, because they just tax more to fix their terrible management. Give money back to those “real people” you cited. They know what best to do with it, not government employees.

    4) Make it clear to the world that we are not going to ruin the entrepreneurial environment that has creataed the greatest jobs and wealth creating machine the world has ever known over the last 25 years. Again, go read The World is Curved.

    Why do I oppose Obama? Because its not clear to me that he will do “4” above. And that will be a real disaster for those real people you care about. Be careful who and what you support if you really care about “the little guy.”

  8. aaa again on January 17th, 2009

    Make me a promise, Sarah – you will never stop trying to start that business. It is people like you who make this economy work. Its small business that is really the engine of growth and jobs.

  9. Sara Livingston on January 17th, 2009

    Thanks aaa and boomerjeff for the encouragement.

    I agree with Sharon about one thing, it’s scary. There are a lot of businesses closing. But I’m not giving up.

  10. aaa again on January 18th, 2009

    Sarah –

    You may have seen my reference to The World is Curved.

    One amazing stat out of that book is that 8 million jobs are lost in the US each 3 months.

    Let me just stop for a second. That sounds horrific. Of course, the other stat is that more than 8 million jobs are usually created. Such is the natural job churn in our economy.

    Lefties (and the media) only focus on the losses. Pity sells. They ignore the gains. And they posit that losses are unacceptable.

    This is not reality.

    My concern for someone such as you is that the Feds will place too many obstacles in your way.
    I again implore. Stay the course. You are one of our national heros.

    The leaches who vote for Obama and just seek a handout, from you and your risktaking efforts, are our national disgraces.

    I really mean that.