The White House kicked off a “recovery summer” public relations blitz yesterday to promote the alleged benefits of stimulus spending. The mood of self-congratulation was interrupted by a Labor Department report that found initial jobless claims for the week climbed by 12,000. A Conference Board survey showed the average wait in unemployment lines increased from 30 weeks at the start of the year to 34.4 weeks in May. It won’t be a summer of love in those households.
Vice President Joseph R. Biden Jr. was enthusiastic, declaring the stimulus “an absolute success” on Wednesday. Before he and the president begin their victory lap, however, they should take a closer look at the numbers. The current recovery has been one of the worst for job creation on record. Private sector hiring has virtually ground to a halt, and the administration was embarrassed last month when it was reported that 90 percent of the jobs created in May turned out to be short-term Census Bureau hires - and even those numbers appear to be exaggerated.
The job losses for this recession have been far deeper in percentage terms than in any of the 11 recessions since the Second World War. Underemployment, home foreclosures, bankruptcy filings and the number of Americans on food stamps have all increased since the stimulus act was passed. If this is “absolute success” we would hate to see what the vice president would call failure.
The administration’s “jobs” are an expensive form of workfare. Mr. Biden toured a $508 million Brooklyn Bridge makeover project on Wednesday where taxpayers contributed at least $30 million to save or create 150 jobs. That is $200,000 per job just from the stimulus money, not including other federal, state and local funding. On Monday Mr. Biden will tour a project in Midland, Mich., which will “stimulate” 1,000 jobs at a cost of $161,000 per job. Jared Bernstein, chief economist and senior economic adviser to the vice president, said last year that the overall average cost per stimulus job is closer to $92,000, which is still good work if you can get it.
The stimulus approach to economic recovery is not complicated. It is based on the belief that expensive make-work jobs funded by deficit spending will at some point lead to economic benefits beyond the fortunate few receiving the grants. It involves opening the spending spigots and then finding enough shovel-ready projects to spend the money on. It’s a wonderful plan for those whose aspirations in life go no further than short-term employment involving shovels.
The country cannot afford to continue on this path, yet the president continues to propose more of the same. He is asking for a $140 billion Stimulus 2.0 package, claiming it is necessary to stave off the double-dip recession. This may be too much even for the Senate, which has proposed its own euphemistically named “Create Jobs and Save Benefits Act” that spends $165 billion to bail out mismanaged union pension funds. The powers that be in Washington apparently see government as an endless source of funding for their pet projects and political supporters.
It is easy to “create jobs” when one uses the Treasury as an unlimited checking account where the bills never come due. As we are now seeing in the economic collapse of European nations like Greece, the summertime party will come to an end.