If you are cheering for Hayek in the tireless economic wrestling match of Keynes v. Hayek, and if you are a political writer employing your words toward an end rather than simple description, then when an opportunity to present a citeable fact arrives, you use it. That type of opportunity often arrives in the form of Congressional Budget Office reports. Because CBO reports tend to include projections which in turn tend to offer a range of projected outcomes, lesson #1 for the politically-minded economic theorist is to use the portion of the projected range most favorable to the argument at hand. Lesson # 2 is to create a headline to your article that presumes no one will read the underlying report.
Several headlines this past week provide glowing examples of the latter lesson. The CBO issued its latest statutorily required report giving an ongoing and often changing economic analysis of the American Recovery and Reinvestment Act of 2009′s affect on outputs and employment.
According to the Washington Times and Investor’s Business Daily, the news is this, respectively: “CBO: Stimulus hurts economy in the long run” and “The CBO Quietly Downgrades Obama’s $825 Bil Stimulus.”
According to Jay Bookman at the Atlanta Journal Constitution, and Daily Kos blogger, the news is this, respectively: “CBO reports stimulus package was a major economic success” and “CBO Gives Thanks to the Stimulus.”
The Washington Times article offers the best example of lesson #1:
The Congressional Budget Office on Tuesday downgraded its estimate of the benefits of President Obama’s 2009 stimulus package, saying it may have sustained as few as 700,000 jobs at its peak last year and that over the long run it will actually be a net drag on the economy.
I suppose the lesson for the thoughtful audience of political speak is to raise a yellow card at any reference to “as few as” or any other variant suggesting a range. Here, the Washington Times used the low end of the range of employment created, on average, during 2010 – the range was between 700,000 and 3,300,000 people. (Another lesson for the political rhetorician facing a thoughtful crowd: aim to use the ‘opposing end’ of an estimate, and use it as a concession proving the point – like, ‘even if so and so’s best numbers come true, we’d still have such and such problem.’)
Here, anyway, is how the CBO director summarized the 2011 third quarter:
Using such analysis, CBO estimates that ARRA’s policies had the following effects in the third quarter of calendar year 2011 compared with what would have occurred otherwise:
- They raised real (inflation-adjusted) gross domestic product (GDP) by between 0.3 percent and 1.9 percent,
- They lowered the unemployment rate by between 0.2 percentage points and 1.3 percentage points,
- They increased the number of people employed by between 0.4 million and 2.4 million, and
- They increased the number of full-time-equivalent (FTE) jobs by 0.5 million to 3.3 million. (Increases in FTE jobs include shifts from part-time to full-time work or overtime and are thus generally larger than increases in the number of employed workers.)
And here’s the full report – it’s not long.
Finally, I need to dispose of a lingering aftertaste left from my local paper, which today wrote:
In many cases, that is, the stimulus may not have “created” jobs so much as shuffled them around.
This is backed up by research done by the Mercatus Center at George Mason University in Northern Virginia. Researchers there found that in three out of five cases, businesses receiving ARRA money hired people away from other jobs, rather than giving jobs to the unemployed.
When a person leaves a job, in many instances the left-behind job becomes vacant and refilled. Thus, an employed person leaving a job for another job still creates a job opening. That’s common sense, but Jon Chait nicely spelled it out a few months back. The editors at the Times Dispatch, predictably not readers of Chait, are sadly also not patrons of common sense.
