Finding the Facts in the Stimulus Debate

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Facts are sometimes a casualty in the struggle for power. This comes to mind in the discussion of President Obama's biggest legislative accomplishment, the $787 billion stimulus bill -- formally called the American Recovery and Reinvestment Act (ARARA) -- which he signed into law about a year ago.Given the intensity of emotions on either side of the debate over the value of ARARA, it is worth finding some factual answers to the most basic questions about the program. For example, How much of the stimulus money has actually been spent? How many jobs has that money created? How much remains to be spent and how many more jobs will it create?

Finding Some Answers

The answer to the first question is that over a third of the money has already been paid out. According to Recovery.gov, of the $787 billion ARARA, $272.2 billion or 34.6% of the funds had been paid out by the end of January 2010. That money has been spent in three areas: $105 billion (38.6%) on entitlements -- such as unemployment benefits, $92.8 billion (34.1%) on tax benefits, and $74.4 billion (27.3%) on contracts, grants and loans.

The number of jobs that the stimulus has saved or created is in dispute. According to The New York Times, the nonpartisan Congressional Budget Office (CBO) estimates that ARARA has saved or created between 900,000 and 2.3 million jobs. Why the big range? The answer is in the growth assumptions used. CBO Director Douglas W. Elmendorf testified to Congress in January 2009 that the number of jobs created by ARARA would vary depending on how much additional economic output it produced -- which he assumed would range from 1.3% and 3.6% in 2009. The more output, the more jobs created.

Whatever the number of jobs created, one of the big issues with some Americans is how much it cost to create these jobs. Some quick calculations suggest that if we accept that the $74.4 billion spent on contracts, grants and loans ended up creating or saving some jobs, then the cost per job ranged between $32,348 and $82,667 (depending on whether you use the 900,000 or 2.3 million figures from the CBO). If one assumes that all the $272.2 billion went to saving or creating jobs, then the cost per job ranges from $118,348 to $302,444.

Much more of the remaining money will go to the contracts than to the entitlements. Of the remaining $514.8 billion in stimulus money left to be spent, $200.6 billion will go towards contracts, grants and loans, $195.2 billion remains for tax benefits, and $119 billion more will flow towards entitlements.

How many new jobs will this extra money create? Nobody knows but it is possible to make estimates. If we assume that the jobs created so far came from spending all $272.2 billion, then once the remaining $514.8 billion has been spent, ARARA will save or create between 1.7 million and 4.4 million more jobs -- for a total attributable to the stimulus bill of between 2.6 million and 6.7 million jobs.

In the End, Politics

Since these numbers are an important part of the political debate that will shape the outcome of the upcoming mid-term elections, these facts and estimates leave unanswered the political questions: Will voters punish Democrats for a result that does not help the 8.4 million unemployed citizens and their peers? Will Republicans suffer as the party that blames the Democrats for boosting the deficit while quietly accepting the stimulus money and proposing no solutions of its own?

Answers to these political questions are up to the American public.
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