posted by GeoT
WASHINGTON – Beware the math. Some Republican lawmakers critical of President Barack Obama’s stimulus package are using grade-school arithmetic to size up costs and consequences of all that spending. The math is satisfyingly simple but highly misleading.
It goes like this: Divide the stimulus money spent so far by the estimated number of jobs saved or created. That produces a rather frightening figure on how much money taxpayers are spending for each job.
On Friday, the White House released estimates that $160 billion in stimulus spending created or preserved 650,000 direct jobs.
By the critics’ calculations, that’s over $246,000 a job — and a terrible deal for taxpayers. Why spend nearly $250,000 to employ a highway worker or a teacher making a small fraction of that?
The reality is more complex.
First, the naysayers’ calculations ignore the value of the work produced.
Any cost-per-job figure pays not just for the worker, but for material, supplies and that worker’s output — a portion of a road paved, patients treated in a health clinic, goods shipped from a factory floor, railroad tracks laid.
Second, critics are counting the total cost of contracts that will fuel work for months or years and dividing that by the number of jobs produced only to date.
A construction project, for one, may only require a few engineers to get going, with the work force to swell as ground is broken and building accelerates.
Hundreds of such projects have been on the books, in which the full value of the contracts is already counted in the spending totals, but few or no jobs have been reported yet because the work is only getting started.
To flip the equation politically, it’s as if the 10-year cost of George W. Bush’s big tax cuts were compared with the benefits to the economy that only accrued during the first year.