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Even though the stimulus enacted by President Barack Obama in 2009 has been phased out for a few years now, it remains a talking point for some Republican critics. During his response to Obama’s State of the Union address, Sen. Rand Paul, R-Ky., took a shot at the stimulus when he said this:
"Mr. President," Paul said, "where are the jobs? You spent nearly a trillion dollars on make-work government jobs and still joblessness confronts the next generation."
We wondered whether Paul -- a potential 2016 presidential candidate -- was correct to say that Obama "spent nearly a trillion dollars on make-work government jobs."
First, some background on the stimulus, which was passed in 2009 with almost exclusive Democratic backing. When it was passed, the nonpartisan Congressional Budget Office expected more than 90 percent of the cost to occur within fiscal years 2009, 2010 and 2011. It has found that those expenditures have proceeded more or less on schedule.
So far, the stimulus has spent $816 billion. One could characterize that as "nearly a trillion dollars," especially when you add in the debt incurred in order to make that spending possible. The estimate for the debt required to support the stimulus was $347 billion over 10 years, making the combination of the stimulus and the added debt a bit under $1.2 trillion.
What’s more problematic about Paul’s claim is his charge that this money went toward "make-work government jobs." This claim is dubious on two levels.
First, not all the stimulus money went to paying government employees -- only a modest (though uncertain) fraction did.
The stimulus included three broad categories of spending, broken down below with the amount spent so far:
• Tax benefits to individuals and businesses: $290.7 billion
• Entitlements, including Medicare, Medicaid, food stamps and unemployment benefits: $264.4 billion
• Contracts, grants and loans in such areas as education, transportation, infrastructure, energy, science and health: $261.2 billion
So right off the bat, more than two-thirds of the total -- tax benefits and entitlement payments -- cannot be fairly categorized as funding "make-work government jobs." These were payments and tax givebacks for individuals and businesses to spend as they saw fit.
The third category, worth $261.2 billion, did include funding for some government jobs, such as teachers, but a sizable chunk of this money was used by the government to fund work carried out by the private sector, such as road-building companies and hazardous-waste cleanup contractors.
It’s also worth noting that neither the federal government nor government as a whole has seen a surge in employment. According to the Bureau of Labor Statsitics, the size of the federal workforce has declined by 69,000 since Obama took office, though it has risen by about 65,000 if cuts in the Postal Service workforce are not included. That’s about a 3 percent increase over a five-year period if you use the figures that exclude the Postal Service.
The drop is even more clear in government jobs at all levels -- federal, state and local. Since Obama took office, government employment has plunged by 734,000 jobs, which is a decrease about 10 times bigger than the federal increase.
Which brings us to the second concern: Not all of these government employees were engaged in "make work."
Webster’s New World Dictionary defines "make work" as "a job, project or assignment that serves no useful purpose other than to give an otherwise idle or unemployed person something to do." The classic example is of paying an unemployed person to dig a hole, then to fill it up again.
Whether something qualifies a "make work" is open to debate; critics of all ideological stripes can surely find examples of specific projects in the stimulus that they would consider unworthy of taxpayer support.
Still, the biggest category of "contracts, grants and loans" -- accounting for more than one-third of this heading -- is education, and a big chunk of those funds, about $51 billion, went toward keeping previously employed educators from being laid off. Another $16 billion went to student financial aid, plus a combined $24 billion for educating disadvantaged and special-needs children.
Since much of this funding went toward teachers who were already employed, and were in danger of being laid off, it seems hard to characterize their duties as "make work."
When we checked with Paul’s office, aides offered a revised phrase to replace "make-work government jobs" -- namely, "government-facilitated job growth."
This terminology would be more accurate; indeed, we’d expect to find little disagreement with this from Democrats who supported the stimulus. The stimulus was the keystone of Obama’s efforts to stop the nation’s economic freefall, while also accomplishing some other priorities in such areas as infrastructure and scientific research.
Democrats tend to believe that government spending -- called "Keynesian" after its progenitor, the late economist John Maynard Keynes -- plays a major role in economic downturns in replacing vanished or reduced spending by the private sector. Some Republicans are skeptical of this approach, suggesting that tax cuts get more money into the hands of private individuals who can lead an economic recovery more effectively than the government can.
We won’t referee that debate. Instead, we’ll note that we would have agreed there’s a good argument that Obama engaged in roughly $1 billion of "government-facilitated job growth." That, of course, begs the question of whether the payoff in job creation was worth the $1 trillion spent. Employment is up by 3.2 million since Obama was sworn in, but it remains almost 1.2 million below its peak, almost five years into the recovery.
Paul said Obama "spent nearly a trillion dollars on make-work government jobs." It’s plausible that through the stimulus, Obama spent nearly $1 trillion of taxpayer dollars in hopes it would create jobs. But Paul is wrong to suggest that all $1 trillion was spent on "make-work government jobs." Two-thirds of the stimulus was spent on tax cuts and entitlements, and of the remaining one-third, much was paid to private contractors. Only a modest fraction of the $1 trillion was spent on government jobs, much less on jobs spent doing nothing. We rate his claim False.
Rand Paul, response to the State of the Union address, Jan. 28, 2014
recovery.gov, breakdown of stimulus funding, accessed Jan. 30, 2014
Congressional Budget Office, "Actual ARRA Spending Over the 2009-2011 Period Quite Close to CBO's Original Estimate," Jan. 5, 2012
Congressional Budget Office, cost estimate for the economic stimulus, Feb. 13, 2009
Congressional Budget Office, estimate of debt service for the stimulus, Jan. 27, 2009
Bureau of Labor Statistics, "Employment, Hours, and Earnings from the Current Employment Statistics survey (National)," accessed Jan. 30, 2013
Webster's New World Dictionary, third college edition
Email interview with Steve Ellis, vice president of Taxpayers for Common Sense, Jan. 30, 2014
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