The Political Battle Over Counting Stimulus Jobs

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National Park Service trail crew member Tim Walters breaks rocks in the Grand Canyon National Park while working on a projected funded by federal stimulus dollars. New figures show that the stimulus bill has created more than 30,000 private-sector jobs.

John Moore/Getty Images

National Park Service trail crew member Tim Walters breaks rocks in the Grand Canyon National Park while working on a projected funded by federal stimulus dollars. New figures show that the stimulus bill has created more than 30,000 private-sector jobs.

The U.S. government has offered some early data on the $787 billion stimulus program, reporting that federal contracts worth some $16 billion have saved or generated more than 30,000 private-sector jobs so far.

The number represents the first hard count of jobs tied to the stimulus, but it is preliminary and covers only a tiny portion of the overall spending. A more comprehensive count will be released on the government's Recovery.gov Web site at the end of October, though the bulk of stimulus money still has yet to be spent.

Of course, none of this will stop Democrats or Republicans from trumpeting the success or failure of the program. The stimulus has become ground zero for the political battle over jobs, which is shaping up to be one of the most important political issues for next year's congressional midterm elections.

The Obama White House quickly issued a statement Thursday from its chief economist, Jared Bernstein, saying that this direct count of jobs created by private businesses receiving federal contracts "exceeds our projections" and helps bolster its analysis that the stimulus program has created or saved about 1 million jobs in its first seven months.

"They can do whatever analysis they want, but things are not going the way they forecast," says Diana Furchtgott-Roth, who served as chief economist at the Labor Department during the Bush administration and now runs the Center for Employment Policy at the conservative Hudson Institute. "In those areas where the stimulus money is supposed to be going — infrastructure and social services — we're not seeing an effect, and we are seeing a continuing decline in employment."

House Minority Leader John Boehner (R-OH), who has hammered on job losses on a near-daily basis, echoed her sentiments on Fox News, saying, "Three million Americans have lost their jobs since this trillion-dollar stimulus bill was signed into law."

Obama officials rejected that analysis. "No one ever believed that there is any stimulus act, any conceivable legislation, that could have completely offset the deepest recession since the Great Depression," the White House's Bernstein told NPR's Brian Naylor. "This act is clearly offsetting some of the pain. That's all we've ever said it could do."

So Who's Right?

Economists on both sides of the debate agree that the actual number of jobs created by the stimulus package will likely never be known. Large swaths of stimulus money went to provide tax relief, extend unemployment benefits and provide fiscal relief to beleaguered state government budgets. These programs have largely indirect effects on employment.

Only about a third of the stimulus funds — some $275 billion — are going to grants, contracts and loans that will be tracked on Recovery.gov. The 30,000 jobs reported so far cover only direct contracts, which represent $16 billion of that total.

But these numbers are still important politically. Republicans have made the jobs issue a centerpiece of their attacks on Democrats, while the Obama administration is under pressure to demonstrate that its policies are having a real impact.

"It matters enormously, which is why we're seeing this approach of bringing out numbers as quickly as possible and as often as possible to show tangible results for the bill," says Douglas Holtz-Eakin, a former director of the Congressional Budget Office who served as the top economic adviser to Arizona Republican Sen. John McCain's presidential campaign. "I don't think this is going to win the political battle. This is a really weak number."

Meanwhile, many Democrats are worried that the piecemeal reporting of these numbers could backfire for the Obama administration, because the early figures are so small.

"This administration is bending over backwards to be transparent, but in the end, it may be political jujitsu, because it's so hard to document these various effects," says Lawrence Mishel, an economist who runs the Economic Policy Institute, a liberal think tank. "Even the people who are the winners from this don't necessarily know it."

Mishel notes that many economists, including those at Goldman Sachs, estimate that the stimulus package lifted the U.S. economy by between 2 and 3 percentage points in the second and third quarters of 2009.

In other words, "if gross domestic product shrank by 1 percent in the April-May-June period, it would have fallen by 4 percent without the recovery package," he says. "The plain facts are we've been losing jobs, but we've been losing them at one-third the rate we were losing them at the beginning of the year before the recovery package."

Tough To Brag About What Was Averted

Still, even most Democrats acknowledge that this is a very tough political message to sell.

"Nobody wants to hear the spin about what would have happened or what could have happened," says Brent Budowsky, a Democratic strategist. "They want to know what's happening."

Some Republicans make the case that the stimulus package has actually hurt the economy overall because the extra spending is fueling even larger budget deficits. "We can conclude that the stimulus did more to harm the economy than help it," says Furchtgott-Roth. "People are concerned about these massive borrowing increases and the massive tax increases, and this makes them less willing to spend and less willing to invest."

Not all the critics go that far. Holtz-Eakin says the bill was "badly designed," but is having some sort of effect. "It's impossible to have that big a fiscal policy and have no impact on the economy," he says. "The big question has always been: Are we getting our money's worth out of this?"

While the political fight over the stimulus will continue in Washington, strategists for both parties say the nation's unemployment rate, which currently stands at 9.8 percent, is the figure to watch. Most economists expect that it will hit 10 percent in the coming weeks or months, a milestone that many observers expect will trigger another set of political attacks.

"That number is a political inflection point that is coming momentarily," says Budowsky. "Politically, when that number flashes across the screen, the political system will explode. The symbolism merges with the reality in people's lives."