Analysis: GOP's Stimulus Math off the Mark

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 .

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.

Third, the package approved by Congress is aimed at more than direct job creation, although employment was certainly central to its promotion and purpose.

Its features include money for research, training, plant equipment, extended unemployment benefits, credit assistance for businesses and more - spending meant to pay off over time but impossible to judge in a short-term job formula.

Nor do the estimates made Friday include indirect employment already created by the package - difficult if not impossible to measure.

Republican lawmakers have been performing their exercise in division for months.

"All told, the plan would spend a whopping $275,000 in taxpayer dollars for every new job it aims to create, saddling each and every household with $6,700 in additional debt paid for by our children and grandchildren," Ohio Rep. John Boehner, the House Republican leader, said back in January.

That line of argument continued Friday. Don Stewart, spokesman for the Senate Republican leader, Mitch McConnell of Kentucky, encouraged reporters to "get out your calculators" and divide the spending by the jobs.

Using a somewhat lower cost figure than the White House reported, he came up with $230,769 per job.

On Monday, former Massachusetts governor and one-time Republican White House hopeful Mitt Romney said the stimulus has had no effect at all.

"Well, first of all, you have to recognize that the stimulus that the president and Congress passed is not what's helped this economy," he said during an appearance on CBS' "The Early Show". "As you recall, the scenario they forecast would occur without the stimulus, is now the very scenario which they're forecasting is going to occur. So the jobless rate is going to hit 10 percent, we're not going to have any net new jobs into the third quarter of next year. That's what was supposed to happen without the stimulus. So their stimulus didn't work.

"The right answer is to stop the stimulus that they put in place, reform it, or scrap it, because it is not what's creating jobs in this country; instead, it's the private sector. Look, any time you try to stimulate government, you're not going to get the kind of private sector jobs you'd get if you instead stimulated the economy."

The debate over whether the stimulus was worth it will drag on, to be judged over time by the strength of the recovery just beginning, by whether the unemployment rate finally comes down and by the consequences for the national debt from the spending and tax-cut surge.

Dividing apples by oranges won't settle it.