White House trumpets reports on job creation

By Alec MacGillis and Michael A. Fletcher
Washington Post Staff Writer
Saturday, October 31, 2009

The White House on Friday embraced reports showing that the $159 billion in grants and loans made so far under the economic stimulus package has created or saved about 640,000 jobs, even as Republicans and government watchdogs questioned the reliability of the figures.

White House officials said the reports -- the first batch of filings by states, cities and other recipients of stimulus grants and loans -- buttressed their calculation that the full $787 billion package passed in February has saved or created 1 million jobs.

Friday's numbers fell short of 1 million, officials said, because they do not include $180 billion of the package's spending so far -- tax cuts, safety net spending and fiscal aid to states. In addition, only $25 billion of the $159 billion in grants and loans reported Friday has been spent, meaning that those awards may yet lead to more jobs. And the reports do not gauge the broader "multiplier effect" of the money in the economy.

"The Recovery Act is operating as advertised," declared Vice President Biden, flanked by California Gov. Arnold Schwarzenegger (R) and Maryland Gov. Martin O'Malley (D).

But Republicans and other skeptics sought to debunk the data, making for another turn in the high-stakes debate over the state of the economy and the role that the stimulus has played in slowing its slide. A day earlier, Democrats had hailed the report that the economy had grown in the third quarter at a rate of 3.5 percent, in an apparent halt to the recession, which many economists attribute to the stimulus and subsequent boosts like the "Cash for Clunkers" program.

Republicans have pointed to the 9.8 percent unemployment rate, setting it against the White House prediction last winter that the stimulus would keep unemployment at 8 percent. On Friday, they zeroed in on the vagueness of the "jobs created or saved" terminology, noting the subjectivity in determining whether a given job truly would have been lost in the absence of the stimulus.

"The trillion dollar 'stimulus' isn't working, and no amount of phony statistics can change that," said House Republican Leader John A. Boehner (Ohio).

The jobs figures also raised questions among more neutral observers, who at the same time hailed the transparency of providing the 120,000 reports, which are available at http://www.recovery.gov. The jobs estimates likely understate the reality, they said, noting that the reports were required only of the direct recipients of funding and any secondary recipients and so do not take into account jobs that may have been created by subcontractors or suppliers further down the chain.

Watchdog groups also noted the wide variability in how recipients calculated the number of full-time jobs that were created, given the fact that the funding paid for many temporary jobs.

Question of focus

Gary Bass, director of the nonpartisan group OMB Watch, said the debate over the jobs data raised the question of why the White House cast the stimulus as a jobs-creation initiative instead of describing it more broadly as a way to boost the economy, especially since much of the package went to tax cuts and safety net relief rather than direct job creation. White House officials have estimated that the program will, over its three-year life, create or save 3.5 million jobs.

"I would not have framed it as a jobs bill or a jobs law, as they have done," Bass said. "And if I were doing that, I would have had a much more rigorous reporting regime, with much better methods for ensuring accuracy."

Friday's reports followed the Oct. 15 release of reports based on a more limited slice of spending, about $16 billion in federal contracts. The funding was reported to have created 30,000 jobs.

In a press briefing, Ed DeSeve, the Biden aide overseeing the stimulus, and Jared Bernstein, Biden's economic adviser, acknowledged that the data was not perfect. But they pushed back at criticism, including Republican calculations that the reports, taken literally, would mean that each of the 640,000 jobs created would have cost $248,000. This, Bernstein said, was "worse than fuzzy" math, because it overlooked more indirect job creation.

Bernstein also pushed back against months-long criticism that the stimulus is not going where it is needed most, noting that the reports show job creation at rates of 25 percent higher in the five states with the highest unemployment last winter.

The reports do not differentiate between jobs created or saved, but many appear to fall under the "saved" variety. More than half of the 640,000 were teaching jobs, for example, and governors have made clear that stimulus money has helped them avoid teacher layoffs.

Bernstein argued that saved jobs as well as new jobs keep down the unemployment rate.

DeSeve said the public had to take on faith that states and cities were reporting "saved" jobs that were truly at risk. "What we have to do is rely on the fact that public officials are honest," he said.

Schwarzenegger said the stimulus prevented tens of thousands of state employee layoffs. "There are some people, some of our colleagues, that are saying it hasn't done much or it was a waste of money," he said. "Well, I would dispute that, because for California it has done a lot."

© 2009 The Washington Post Company