Just before the Thanksgiving holiday, the Congressional Budget Office released its latest estimates of the economic effect from the Obama stimulus package, and guess what: The stimulus did less good than earlier estimates suggested.
There's a big shock.
Overall, the CBO says, the nearly $1 trillion in government spending did produce some mild benefits. But the CBO lowered both the optimistic high-end and the pessimistic low-end estimates of the American Reinvestment and Recovery Act's (ARRA) effect on economic growth and employment.
What's more, the CBO concedes that "the impact on employment suggested by [CBO] reports could be too great. Some people whose employment was attributed to ARRA might have worked on other activities in the absence of the law." 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.
Finally, the CBO concedes that in the long run, the stimulus will be harmful because of "the resulting increase in government debt." In the future, some jobs that would have been created otherwise will not be. Of course, those losses may be offset by all the current man-hours devoted to stimulus cheerleading. It might not show up in tables from the Bureau of Labor Statistics, but the pro-stimulus snow job may be the biggest ARRA-related job of all.
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