Let the word go forth from this time and place, to friend and foe alike, that the torch has been passed to a new generation of Americans, a generation that believes that if you take money from one sector of the economy, give it to government, and then government hands it to another sector, government has “created jobs“:
On the stimulus’s first anniversary, keep in mind one number: 6.3 million.
By the president’s own logic, the stimulus failed. So Obama has shifted his argument. Sure, the economy lost jobs, he now says, but without the stimulus it would have lost nearly 2 million more jobs.
This “it would have been worse” theory is completely unprovable. No one knows how the economy would have performed without the stimulus.
Furthermore, it’s faith-based economics. The White House’s new estimates of “saving” nearly 2 million jobs are not based on observations of the economy’s recent performance. Rather, they are based on the Obama administration’s unshakable belief that deficit spending must create jobs and growth. Specifically, the White House’s “proof” that the stimulus created jobs is an economic model that they programmed to assume that stimulus spending automatically creates jobs.
How’s that for circular logic?
The idea that government spending creates jobs makes sense only if you never ask where the government got the money. It didn’t fall from the sky. The only way Congress can inject spending into the economy is by first taxing or borrowing it out of the economy. No new demand is created; it’s a zero-sum transfer of existing demand.
The White House says the $300 billion spent from the stimulus thus far has financed as many as 2 million jobs. Maybe. However, the private sector now has $300 billion less to spend, which, by the same logic, means it must lose the same number of jobs, leaving a net employment impact of zero. But the White House’s single-entry bookkeeping simply ignores that side of the equation.