Senate Majority Leader Harry Reid has promised the $15 billion jobs bill the Senate passed yesterday will create or save more than 1 million jobs. If Senator Reid’s math is correct, the $500 billion stimulus package the Democrats passed last January should have created or saved more than 25 millions jobs. But not even the White House, which is hardly shy about touting the success of the Recovery Act, would dare float such an ambitious projection.
“It seems like a really high estimate. I don’t know on what basis he’s saying that,” said Craig Jennings, director of federal fiscal policy at OMB Watch. “Overall this jobs bill is really weak tea for job creation. A lot more needs to be done.”
Focus has been on the $1,000 credit for employers that hire people who have been out of work for more than 60 days, but Jennings said the incentive is too small make much impact on hiring.
Most of the jobs Reid has promised should come from the one-year re-authorization of a highway trust fund program, which will require $20 billion to be transferred from the Treasury’s general fund. Reid claims the highway spending will save 1 million jobs. When asked where he came up with that figure, a Reid spokesperson cited the executive director of the American Association Of State Highway And Transportation Officials.
In contrast, the White House set far lower job creation targets for the highway spending included in the Recovery Act. According to the LA Times, the White House estimated that $1 billion spent on highway work would create 11,000 jobs, directly or indirectly. So the $20 billion in the jobs bill would end up creating 220,000 jobs by the administration’s math.
Of course if the administration, like Sen. Reid, were willing to trust the word of the leading advocacy group for state highway officials, then it’s clear that the entire stimulus should have been spent on the nation’s highways. Even according to the administration’s calculations, spending $500 billion on roads should have created 5.5 million jobs.
But the White House’s most ambitious estimates of the number of jobs saved are half that number, despite the stimulus’ ostensible focus on projects that are “shovel-ready.” The significant disparities between the various models lend credence to critics that claim such estimates of jobs saved are rank speculation.
“I think the estimates of jobs created with these various federal efforts, you could just write down numbers on pieces of paper, throw them in a hat, pull out a figure and it is likely to be just as accurate,” said Tad DeHaven, a budget analyst at the Cato Institute.