Monday, November 16, 2009

How's that stimulus working out for you, Michigan?

Apparently, the stimulus is not doing as much for Michigan as the administration would like to pretend. The Detroit Free Press, like many other local newspapers, is casting a skeptical eye over the administration's report of how many jobs have been supposedly "created or saved." And guess what? Surprise, surprise. The White House's report is rife with errors.
The Free Press examination of more than 1,800 government reports of those who have received or expect to receive stimulus money found the biggest impact was spurring or protecting public-sector or summer jobs -- not private-sector jobs. Michigan has the nation's worst unemployment rate.

Officials reported that by Sept. 30, some 22,500 Michigan jobs were created or retained thanks to the promise of $5.2 billion in stimulus money for the state, $1.2 billion of which had arrived.

The analysis also found:

• Three of every four stimulus grants, contracts and loans approved in Michigan created or retained one job or less.

• Fewer than 700 awards had received some money, and nearly half of those -- 327 -- had created one job or less, at a cost per job of $2.7 million.

• Some job estimates were wrong: General Motors Co., for instance, reported 105 jobs saved or created for a government purchase of 5,000 vehicles but later said no jobs were saved or created. The City of Detroit reported 342 jobs it now says were projections -- not jobs already created or retained....

The Ingham County Health Department reported 97.49 jobs retained, but an official with the agency said without the funding, six jobs would have been lost. The Inter-Tribal Council of Michigan in Sault Ste. Marie, which provides services to member American Indian tribes, reported 99 jobs created or saved thanks to $46,000 in cost-of-living adjustments for Head Start employees. An official with the tribal council said she believes no jobs would have been lost without the government money....

Of 22,513 jobs reported, 13,555 were tied to state money for education, doled out to local school districts. Without a huge economic turnaround or more federal money after the 2-year stimulus ends, many of those jobs could be threatened.

Another problem: More than 3,000 were summer-only jobs for youths. Those jobs do little to bring down Michigan's highest-in-the-nation unemployment rate.

At some point, someone will tally up all the errors and give a more accurate projection of what the stimulus has done. But we'll never really know since there is absolutely no way to systematically count how many jobs would have been lost without the stimulus. And we'll never know how many jobs would have been created "or saved" if that $787 billion had been spent in other ways. There were other proposals at the time of how to address the bleak employment picture and the eventual bill that passed was full of Democratic wish list projects, pork, and social programs, but was never any economist's idea of an ideal stimulus package. While counting up all those mythical jobs that the Pelosi-Reid-Obama stimulus bill supposedly created, let's not forget the unseen road not taken of how other actions might have gotten more money out into the system faster such as Lawrence Lindsey's proposal of a payroll cut. There were many economists at the time who criticized the porkapalooza that the stimulus bill became and who had other proposals of how the federal government could more quickly stimulate job growth. Even at the time, the CBO projected that little of the stimulative effect of the package would be felt this year. So why should anyone be surprised that unemployment has increased rather than decreased as the Obama economists were promising it would if their bill was passed lickety split without much debate or analysis. It is those unseen effects of having chosen the path the Democrats chose rather than another path that can never be counted. As it becomes clearer every day that the stimulus bill has been quite a flop at leading to any sort of economic growth and true job creation, we're left with the administration's phony numbers and a wistful wish for what might have been.