Seven months into the massive federal stimulus program, the vast majority of government grants, contracts and loans in Michigan so far have created or retained virtually no jobs, a Free Press analysis shows.
…”It looks to us like the program is unfolding much as we hoped in Michigan,” said White House economic adviser Jared Bernstein.
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.
…Flawed reports raise questions about how stimulus has helped
…A Free Press analysis of reports on more than 1,800 awards to agencies, departments, municipalities and firms in Michigan under the American Recovery and Reinvestment Act found huge inaccuracies in job estimates of several recipients and millions of dollars in errors in their reports.
It also found that the vast majority of jobs reported or created — 85% — were tied to 15 primary recipients, with three-quarters of all stimulus awards made to date in the state creating or saving one job or less. Most of those funded still were awaiting checks, which could help explain the lag in job creation. Still, hundreds of awards led to reports of job creation before stimulus money arrived.
Some are clearly wrong.
Detroit reported on a grant award — $10 million for work on 14 improvement projects in the city — saying 342 jobs had been saved or created, despite none of the money actually reaching the city yet. Last week, city officials told the Free Press those were only projections — not jobs saved or created.
…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.…About a third [of the stimulus spending] — $275 billion — will be directly spent nationally in areas such as state stabilization funds to support government jobs; building and repairing roads, bridges and other infrastructure; investing in drinking water and wastewater projects; funding alternative energy projects, and much more.
…The rest of the stimulus spending goes for tax cuts — the Making Work Pay tax cut was worth about $65 a month to the average household, for instance — and entitlement programs, such as those increasing unemployment benefits and covering the government’s commitment to pick up 65% of the premium for health insurance for laid-off workers.
Bernstein says those tax cuts and entitlements have already contributed to the 3 million to 4 million jobs expected to be created or retained through the stimulus.
Last month, the Recovery Office reported that $37 billion in checks had gone out for $159 billion in direct investment awards by the end of September. The estimated jobs created or saved: 640,000.
Can someone please tell me how giving “the average household” $2.17 a day and increasing unemployment benefits creates jobs???
Unemployment is at historic levels. Consumer prices are rising. The recession (sorry, Mr. Paulson) is not over. It doesn’t matter how many bazillion jobs Obama saves with the Stimulus…and I’m sure by now we are up to a bazillion or two…as long as we are “saving or creating” it means nothing.
My husband saved seven jobs today. How, you ask? He didn’t fire his guys when he went into work this morning. He’s such a great guy, I’ll bet he’ll save seven jobs tomorrow too. On a good week, he saves thirty-five jobs singlehandedly!
When Obama drops the rhetorical flourish and goes for the more honest “jobs created” (fat chance,) then we should listen. Otherwise, tune this propagandist garbage out.
I suppose next he’s going to expect us to believe Big Pharma is going to sacrifice their profits for our well-being, or that he and his advisers aren’t all Marxists. What kind of fools does this administration take us for?
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7 Comments
November 16, 2009 at 9:39 pm
I can’t figure out what is so conceptually difficult about the idea that an infusion of money – be it from a private business or from the government – is capable of “creating or saving” jobs. If a factory receives a new order that allows it to open a new production line, that new order has created jobs. If, instead, it receives a new order that enables it to continue a production line it had previously planned on closing, that new order has saved jobs that would otherwise have been lost. Regardless of where the money comes from, it is elementry economics that infusions of money can offset losses of productive capacity. But don’t take the word of some New York Democrat. Here is how President Bush’s chief ecoomist described how Bush’s classically Keynesian fiscal stimulus (in the form of debt-financed tax cuts) created or saved jobs during the 2002-04 recession:
“As the President has discussed, analysis done within the Administration has shown how his tax cuts have substantially offset the series of adverse shocks that have been buffeting the economy. Simulations of a conventional macroeconomic model show that, without the tax cuts, the level of real GDP would have been about 2 percent lower in the middle of 2003. About 1.5 million fewer people would have jobs today. The job market is not what we would like it to be right now, but it would have been worse without the Administration’s actions. “One can view the short-run effects of these tax cuts from a classic Keynesian perspective. The tax cuts let people keep more of the money they earned. This supported consumption and thus helped maintain the aggregate demand for goods and services. There is nothing novel about this. It is very conventional short-run stabilization policy: You can find it in all of the leading textbooks.”
http://gregmankiw.blogspot.com/2007/07/on-charlatons-and-cranks.html
President Bush’s Keynesian stimulus was through debt-financed tax cuts. President Obama’s stimulus has been through a combination of tax cuts, infastructure investments, social safety-net expenditures (extended unemployment benefits, etc.), and aid to state and local government to counter the pro-cyclical nature of their financial structures. One can argue over which method is best, but the idea that fiscal stimulus in recessionary conditions creates or saves jobs (especially when interest rates are at the zero boundary) is pretty standard economic theory. As Professor Jacob Frankel of the Harvard Economics Department notes, “Claims by Republican congressmen that one should judge Obamanomics by looking at whether employment is greater now than before February are nonsense. If there hadn’t been a severe recession underway (starting on the predecessor’s watch, if you want to get political about it), there would have been no need for the stimulus. None of us claims that fiscal stimulus creates a lot of jobs on net when the economy is already expanding strongly. … But without the recent stimulus, the recession would have been worse. The appropriate way to estimate the stimulus impacts is by means of a standard macroeconomic model with fiscal multipliers in it. But if you believe philosophically that fiscal multipliers are zero, even in a severe recession, then neither a standard macroeconomic model nor anything else will convince you.” http://content.ksg.harvard.edu/blog/jeff_frankels_weblog/2009/11/09/counting-jobs-saved-by-obamas-fiscal-stimulus/
The President’s textbook-theory fiscal stimulus is one of several reasons why the economy is now likely out of recession (despite the fact that employment, as usual, lags behind GDP growth for several quarters.)
2. Incidentally, there is an amazing wealth of interesting information about the stimulus program at recovery.gov, including lists of every single grant, broken down by state, city and zip code. It is a model of governmental transparency.
3. Finally, the cheap shot about the President and his advisors being “Marxists” is very unbecoming. He is a moderate Democrate pursuing moderate domestic policies at the advice of senior advisors who are almost uniformly moderate or conservative. It is really as corrosive to call one’s political opponents Marxists as it is to call them Nazis.
November 16, 2009 at 10:02 pm
I don’t know why it is so conceptually difficult to understand that “saved or created” is code for “accomplished damn near nothing.” How many jobs have been CREATED, period? The government needs to tell us that or just shut up about the Stimulus.
You are delusional. Barack Hussein Obama is a Marxist. His closest advisers are Marxists.
His ultimate goal for this country through all his agenda items:
“From each according to his ability. To each according to his need.” — Karl Marx
November 17, 2009 at 12:07 am
1. The stimulus package, along with the Fed’s quantitative easing, the TARP funds, the fast footwork on the various regrettable but necessary bailouts, and very deft international econonomic coordination with our partners has sucessfully responded to what has literally been the greatest economic crisis since the Great Depression and has prevented what looked last winter like the imminent collapse of the financial system.
2. You are dooming yourself to a generation-long period of political irrelevance if you persist in insisting that a moderate President surrounded by conservative advisors is actually a Marxist guided by fellow Marxists. Even worse, (in my book) you are draining terms like “Marxism” of any actual meaning. When words that mean something real and concrete get turned into cheap, if temporarily thrilling epithets, the language itself suffers a permanent harm. It used to be conservatives who urged me to read Orwell’s “Politics and the English Language.” Now they all seem to ignore it, if they have read it at all.
November 17, 2009 at 11:36 am
NYP, you are blind to your folly when you continue to characterize Obama as moderate. How can you even think that has any plausibility? The only evidence of moderation is his vocal tone and the fact that he has a female spouse and two lively daughters. His policies, his goals, his implementation of powers reeks of a complete lack of moderation. What is moderate about his proposed and fought-for “more-than-a trillion-dollar” health care take over? What is moderate about taking over whole large companies like GM? What is moderate about additional multi-billion spending in the name of stimulus when no actual accountability is required or even made? Your credibility — despite your friendly manner and temperate demeanor — has taken a drastic, ground crushing nose dive.
November 17, 2009 at 11:37 am
Sorry — “lovely” daughters
November 17, 2009 at 12:32 pm
to “neighbor & friend”
1. the daughters appear to be lively as well.
2. If you wish (& after I pay some bills,) I will explain why I made the statements I did. On the other hand, if your mind is completely made up and nothing can possibly change it, I won’t waste your time.
November 17, 2009 at 8:35 pm