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CBO says stimulus may have added 3.3 million jobs

By Lori Montgomery

President Obama's much-maligned economic stimulus package added as many as 3.3 million jobs to the economy during the second quarter of this year, and may have prevented the nation from lapsing back into recession, according to a report released Tuesday by the non-partisan Congressional Budget Office.

In its latest quarterly assessment of the act, the CBO said the stimulus lowered the unemployment rate by between 0.7 and 1.8 percentage points during the quarter ending in June and increased the number of people employed by between 1.4 million and 3.3 million. The higher figure would come close to making good on Obama's pledge that the act would save or create as many as 3.5 million jobs by the end of this year.

The CBO said the act also increased the nation's gross domestic product by between 1.7 percent and 4.5 percent in the second quarter, indicating that the stimulus may have been the primary source of growth in the U.S. economy. The Commerce Department estimates that GDP grew 2.4 percent in the second quarter, a figure many economists expect to be revised lower in a report due out Friday.

The CBO cautioned that the the act's effects are expected to "gradually diminish during the second half of 2010 and beyond," leaving the private sector to pick up the slack in an economy that is already showing signs of deteriorating rapidly. On the bright side, the CBO revised the cost of the package downward: Originally estimated to cost $787 billion over 10 years, the stimulus was later estimated to cost $862 billion. But in the report released Tuesday, the CBO said it now expects the measure to cost only about $814 billion through 2019, with 70 percent of those costs incurred by the end of this year.

Polls show that the public is deeply skeptical about the stimulus and tends to believe that it increased the national deficit without improving the economy. Republicans hoping to seize control of Congress in the November midterm elections have been blasting the act as a failure. But the CBO, which is respected by both Republicans and Democrats, has long held a different view and Democrats hailed Tuesday's report as further vindication of the president's signal economic achievement.

"This new analysis from the nonpartisan Congressional Budget Office is further confirmation of what we've been hearing from leading economists, the nation's governors and families across the country: the Recovery Act is working to rescue the economy from eight years of failed economic policy and rebuild it even stronger than before," Vice President Biden said in a statement.

By Mike Shepard  |  August 24, 2010; 6:42 PM ET
 
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Comments

The CBO is anything but "non partisan".They have caved to the Administration.There numbers can`t pass a laugh test.Added 3 million jobs in the second quarter? Right on...we see evidence in every state and on every street corner.

Posted by: bowspray | August 24, 2010 9:57 PM | Report abuse

Bowspray - then why do Repubs keep citing the CBO every time it disagrees with them? I guess your definition of a neutral observor is Fox News.

BB

Posted by: Anonymous | August 24, 2010 11:41 PM | Report abuse

Bowspray - stop following the playbook of "if a story doesn't say what I want it to say, attack the source". So was the CBO non-partisan when it was calculating the cost of the health care plan? Of course it was ... it is the only non-partisan place in town. If you've been on the front lines, you'll know that the economy for the past two years had one or two phases (mid 2009, early 2010) when the pace of growth looked like it would be sustained. My anecdotal evidence? Job listings and recruiting had peaks during those time. They have since fallen off. I can believe the CBO ... is it enough growth? No. But I'd hate to see where we would have been had we done nothing.

Posted by: tgaylord1999 | August 24, 2010 11:44 PM | Report abuse

bowspray writes:
The CBO is anything but "non partisan"

The CBO has delivered some stinging reports to the democrats and Obama and it has delivered some helpful ones.

The poster then proceeds with the typical straw-man argument, made by conservatives, that the 'failed' stimulus did not 'cure' the economy and restore paradise. It was never the objective! We lost over 8 million jobs. The stimulus was sold to 'save' or create 3.5 million (which it did). That's about 5 million jobs still expected to be missing. The president said over and over that it is the private sector that will ultimately lead the recovery and now, with most of the stimulus used, we are bickering over the pace of the recovery instead of being mired in a depression. The results of the stimulus don't seem too weak or too strong. It simply braced the economy to avert a continued deflationary spiral while making some forward-looking investments in science, technology and infrastructure (which the government has always done under D's and R's) . In November the republicans, with help from the self-serving media, might rook some voters who are only half-listening, but if and when they are sworn in to office they will be responsible for the economy and will surely disappoint the tea baggers when they are subjected to the realities of actual numbers and basic economics. Why didn't the republicans enact deep spending cuts (or ANY spending cuts) all those years in power? Simple. They knew it would slow the economy and they didn't want to get blamed. Oh yeah, and they also had their precious Bush tax cuts in place. How did THAT go? Face it, you present-day-loony-cons might win a few scrapes in the short term, but you are going to lose the war. And your shrill, public hissy-fits reveal that you know it will be over very soon. I can see it on your faces.

Posted by: swankcurtain | August 25, 2010 12:03 AM | Report abuse

"CBO says stimulus may have added 3.3 million jobs"

-------------------------------

"may have"? Please, I wish I could use the CBO's fuzzy math when I was at work too! These are made up numbers, there is no evidence to support any of their claims.

And yes gaylord, the CBO is NOT bi-partsian. How can it be when its director is appointed by the President. There is an obvious conflict of interest. This CBO will never come out with any report that show any of this administration's policies in a negative light. And no, it is not because the policies work. Our current unemployment rate proves Obama's stimulus bill is a failure. Obama promised us that if we passed the stimulus bill unemployment wouldn't go higher than 8%. AND if we did nothing unemployment wouldn't get any higher than 9%. Yet, here we sit, unemployment stuck (and increasing) at 9.7%.

Lets just face facts people, Obama's policies aren't working! He doesn't know how to stimulate an economy, create jobs, or run a business for that matter.

It is time to call a spade a spade, and have a real analysis of the stimulus spending done. I can guarantee the bill didn't create or save any where near 1 million jobs.

Posted by: Anonymous | August 25, 2010 12:07 AM | Report abuse

Let me get this straight they actually released a statement saying... the number of people employed by between 1.4 million and 3.3 million.

HMmmmm Thats a difference of 1.9 MILLION. Drink while you think, pick a number and you might be more accurate. Its enough to make a weatherman proud.

Posted by: douglascatch22 | August 25, 2010 12:08 AM | Report abuse

The CBO has delivered some stinging reports to the democrats and Obama and it has delivered some helpful ones.

The poster then proceeds with the typical straw-man argument, made by conservatives, that the 'failed' stimulus did not 'cure' the economy and restore paradise. It was never the objective! We lost over 8 million jobs. The stimulus was sold to 'save' or create 3.5 million (which it did). That's about 5 million jobs still expected to be missing. The president said over and over that it is the private sector that will ultimately lead the recovery and now, with most of the stimulus used, we are bickering over the pace of the recovery instead of being mired in a depression. The results of the stimulus don't seem too weak or too strong. It simply braced the economy to avert a continued deflationary spiral while making some forward-looking investments in science, technology and infrastructure (which the government has always done under D's and R's) . In November the republicans, with help from the self-serving media, might rook some voters who are only half-listening, but if and when they are sworn in to office they will be responsible for the economy and will surely disappoint the tea baggers when they are subjected to the realities of actual numbers and basic economics. Why didn't the republicans enact deep spending cuts (or ANY spending cuts) all those years in power? Simple. They knew it would slow the economy and they didn't want to get blamed. Oh yeah, and they also had their precious Bush tax cuts in place. How did THAT go? Face it, you present-day-loony-cons might win a few scrapes in the short term, but you are going to lose the war. And your shrill, public hissy-fits reveal that you know it will be over very soon. I can see it on your faces.

Posted by: swankcurtain
------------------------------------------

For me the tax cuts were great, and did good things for our economy. It gave everyone more money in their pockets to spend in the economy. Not sure why you think it was a failure? All I hear is that they were unfunded..that doesn't even make sense! how do you fund a tax cut? Seriously? Lets be clear, it was because neither party, even your glorious obama cant seem to pass a balanced budget. So dont blame the tax cuts, that didn't create any problems, it was because congress wasn't able to balance the budget. It has been a problem for Democrats and Republicans alike. But of course liberals blame everything on Republicans, and vice versa. I think the Democrats would have a more compelling argument is Obama was able to actually set a balanced budget himself, yet he cant. Why is that?

But let me be clear, the stimulus bill was also sold as keeping unemployment from going higher than 8%. Right? Good, now that we all agree on that, what happened? Who made the mistake in their analysis? Republicans or Democrats? Thanks! I am glad we agree. Stupid liberals!

Posted by: Anonymous | August 25, 2010 12:18 AM | Report abuse

Anonymous -
1. The President doesn't appoint the CBO Director. The C is for Congressional ... Congress appoints the head of CBO.

2. If you want to hold the administration's feet to the fire for unemployment being ~10% instead of the 8% they talked about, go ahead. What I took from the article is that we would have had even worse unemployment had the stimulus and other items not happened. By the way, it's not increasing. Last I checked, 9.7 is less than 10.2.

3. I don't know how old you are, but I am old enough to remember budgets going back to Reagan. We've had job growth in high tax environments, and we've had high unemployment in low tax environments. In fact, taxes are lower now than at any point in my 30 years of paying them, but the economy is still struggling. That means it takes more than lowering taxes to stimulate an economy.

Posted by: tgaylord1999 | August 25, 2010 12:39 AM | Report abuse

The stimulus was designed to tide the economy over until private sector spending could take its place. Unfortunately, the private sector shows no willingness to spend, and as such, it's a little misleading to say that the stimulus prevented a recession. Perhaps it would be more accurate to say that the stimulus deferred a recession or perhaps temporarily ameliorated the effects of an ongoing recession that has never really gone away.

Either way, the stimulus came at great cost, the Chinese are no longer buying our bonds, and at some point (maybe now) we're going to pay the piper for our many years of profligacy. You can only kick the can down the road for so long.

Posted by: Anonymous | August 25, 2010 12:52 AM | Report abuse

Well someone is buying our bonds ... that's why interest rates are so low. If we had trouble selling bonds, the interest rates would have to go up in order to make it attractive to investors.

The stimulus kept the economy from falling off the cliff. It was never supposed to take the place of private sector growth. As for the private sector not spending, the government can't control that. Corporate profits in 2010 are on track to be a record levels, so there's money to spend. The consumer isn't spending because of a renewed (and overdue) sense of saving ... I can't say that's a bad thing. So how do you jump start growth?

Posted by: tgaylord1999 | August 25, 2010 1:03 AM | Report abuse

"...increased the number of people employed by between 1.4 million and 3.3 million."


Such a range indicates uncertainty.

Posted by: Anonymous | August 25, 2010 2:24 AM | Report abuse

Let's pretend that I am in terrible debt, so terrible that I can't even make my mortgage payment. I'm about to lose my house but somehow I find someone dumb enough to lend me some more money. I therefore take that money and use it to pay off my mortgage. Have I improved things?

Hardly. All I've done is produced a temporary illusion of improvment by using borrowed money to paper over my problems and that only at the cost of making my debt and long-term situation that much worse. The ONLY way for me to REALLY solve this problem, as opposed to APPEAR to solve it until the next credit crunch, is to SPEND LESS THAN I MAKE!

The stimulus has been a failure by its own standards. We were promised that if we rushed this half-baked legislation through practically sight-unseen that unemployment would never top 8% and that it would decline starting in August of 2009.

The stimulus most certainly DID NOT FULFILL its projected goals; therefore, it was a FAILURE! These "it could have been worse arguments" are just plain pathetic. One can make that argument to justify ANY policy that doesn't fulfill its aims.

For example, liberals, let's take the Iraq War. We were supposed to find WMDs and we didn't. We can (and should) therefore count the invasion as an expensive failure because it didn't achieve its purported goals. Of course, if we want to live in La-La Land and jusge policies not by how well they achieve their stated aims but rather by what "could" have happened, then even liberals need to admit that the Iraq War was a brilliant idea: if we hadn't invaded Iraq, Saddam COULD have built lots of WMDs by now and allied with Syria and Iran and taken over huge parts of the Middle East. It COULD have happened but the invasion prevented it. Saddam COULD also have been contacted by evil space aliens and used their technology to enslave all mankind.

It "could" ALWAYS be worse. That's why sane people with sane plans judge those plans success by how well they do what they were supposed to do, not by making up scenarios about what might have happened.

Leaving ALL that aside, even IF the stimulus was working TWICE as well as it had been supposed to, it STILL couldn't be called a success, at least not yet: NO economic stimulus based on borrowing money in the public's names and then injecting it into the economy can be called a "success" UNTIL the progress can be SHOWN to be PERMANENT (not likely to disappear with the artificial incentives and stimulants ala the housing credits or cashfor-clunkers) and that borrowed money is paid back (or there is a REALISTIC plan for doing so). UNTIL we pay that money back, the stimulus, even IF it were "successful", is NOTHING MORE THAN MONEY-KITING and a SHELL-GAME.

We're already $13 trillion in debt. How much longer can we keep this up before people and nations will start refusing to lend us more money so that we can keep having things and waging wars without paying for them ourselves?

Posted by: Anonymous | August 25, 2010 4:13 AM | Report abuse

(Sorry for rapid repost, 1st says "anonymous" for some reason.)

Let's pretend that I am in terrible debt, so terrible that I can't even make my mortgage payment. I'm about to lose my house but somehow I find someone dumb enough to lend me some more money. I therefore take that money and use it to pay off my mortgage. Have I improved things?

Hardly. All I've done is produced a temporary illusion of improvment by using borrowed money to paper over my problems and that only at the cost of making my debt and long-term situation that much worse. The ONLY way for me to REALLY solve this problem, as opposed to APPEAR to solve it until the next credit crunch, is to SPEND LESS THAN I MAKE!

The stimulus has been a failure by its own standards. We were promised that if we rushed this half-baked legislation through practically sight-unseen that unemployment would never top 8% and that it would decline starting in August of 2009.

The stimulus most certainly DID NOT FULFILL its projected goals; therefore, it was a FAILURE! These "it could have been worse arguments" are just plain pathetic. One can make that argument to justify ANY policy that doesn't fulfill its aims.

For example, liberals, let's take the Iraq War. We were supposed to find WMDs and we didn't. We can (and should) therefore count the invasion as an expensive failure because it didn't achieve its purported goals. Of course, if we want to live in La-La Land and jusge policies not by how well they achieve their stated aims but rather by what "could" have happened, then even liberals need to admit that the Iraq War was a brilliant idea: if we hadn't invaded Iraq, Saddam COULD have built lots of WMDs by now and allied with Syria and Iran and taken over huge parts of the Middle East. It COULD have happened but the invasion prevented it. Saddam COULD also have been contacted by evil space aliens and used their technology to enslave all mankind.

It "could" ALWAYS be worse. That's why sane people with sane plans judge those plans success by how well they do what they were supposed to do, not by making up scenarios about what might have happened.

Leaving ALL that aside, even IF the stimulus was working TWICE as well as it had been supposed to, it STILL couldn't be called a success, at least not yet: NO economic stimulus based on borrowing money in the public's names and then injecting it into the economy can be called a "success" UNTIL the progress can be SHOWN to be PERMANENT (not likely to disappear with the artificial incentives and stimulants ala the housing credits or cashfor-clunkers) and that borrowed money is paid back (or there is a REALISTIC plan for doing so). UNTIL we pay that money back, the stimulus, even IF it were "successful", is NOTHING MORE THAN MONEY-KITING!

We already have $13 trillion in debt. How much longer can we keep this up before people and nations will start refusing to lend us more money so that we can continue to avoid paying our own way?

Posted by: andrew23boyle | August 25, 2010 4:33 AM | Report abuse

I would be interested to see a break-down on those jobs added or saved. I wonder how many of those were government positions - and if they will end up costing taxpayers in the end. Too, stimulus may have bouyed up the numbers, saved some positions, provided pay checks, but is that an economy? What's left when the stimulus money runs out? The report says the effects of this action will dissipate when the money runs out. Does that mean we've only seen a postponement of something yet to come, the actual crash? When this money runs out we could be back where we were at the beginning of this crisis when this stimulus runs out only more deeply in dept.

Posted by: Anonymous | August 25, 2010 5:24 AM | Report abuse

So who are you going to believe the CBO or
Rush Limbaugh?
As Bill O'reilly Stated don't believe anything a talk radio host tells you.
Kind of fly's in the face Boehner's bonehead comments.

Excerpt from preliminary report released Jan 9. 2009, 11 days before President Obama took office. 38 days before a congressionally modified stimulus package was signed into law.

A key goal enunciated by the President-Elect concerning the American Recovery and Reinvestment
Plan is that it should save or create at least 3 million jobs by the end of 2010. For this reason, we
have undertaken a preliminary analysis of the jobs effects of some of the prototypical recovery
packages being discussed. Our analysis will surely evolve as we and other economists work further
on this topic. The results will also change as the actual package parameters are determined in
cooperation with the Congress...

"We estimate that our program will cause the unemployment rate to be about 1.8 points lower in 2010Q4
than it otherwise would have been."

Posted by: uniteusnow | August 25, 2010 6:04 AM | Report abuse

What a joke - unemployment at 9.5% and really much higher as those that are "no onger looking for a job" are not included. Once again, like a Goebbels radiocast, this administration is trying to outright lie to the American public. A year ago America nay have been naive enough to believe Obama......but not anymore.

Posted by: Realist201 | August 25, 2010 6:06 AM | Report abuse

The reason for this mess has nothing to do with government stimulus or lack thereof. In the short run, stimulus creates jobs at the cost of increased taxes or increased deficit. Economists don't agree on the long term benefit. They obviously can't figure that out, and they are not trying hard enough because their "science" is mired in politics.

We would have none of these debates and concerns if the free market magically created enough jobs for everyone. It does not. See my post at mannucci.wordpress.com.

Posted by: Anonymous | August 25, 2010 7:31 AM | Report abuse

Sweet. Thanks for the heads-up Lori, and thanks WashPo! Also, thanks Obama! We're all saved! SAVED!!!!

Posted by: bzod9999 | August 25, 2010 9:50 AM | Report abuse

What a joke!!!! the CBO is forced to use whatever calculations and assumptions their Dem masters tell them to. Just look at the wide ranges and you can tell the CBO is just guessing. There are no facts behind this report, just guesses based on computer models that begin with the untested assumption that the stimulus would create jobs! Let's see an accounting of all the jobs Prevented or Destroyed by Obama: the 10,000+ jobs lost when Obama fumbled the c,osing og GM dealerships, the 23,000 jobs lost with Obama's illegal, immoral, and unnecessary war of choice on Gulf drilling, the countless jobs not created with Obama's foolish love of card check and cap and trade. The fact that Lori Montgomery and the Post would write this tripe without ANY critical analysis shows they're not really reporters, just Obama sychophants who cut and paste their articles from Dem Party propaganda or from JournoList

Posted by: TruthWins | August 25, 2010 11:23 AM | Report abuse

Give the American public some credit for intelligence. The CBO bases their analysis on figures furnished to them. Who furnished that information? The Democrats in congress.

Posted by: bethg1841 | August 25, 2010 11:49 AM | Report abuse

Trying to make sense of the CBO report? Look at the jobs data straight from the source. Use Bureau of Labor Statistics numbers to analyze job growth for yourself: Still In the Red: The Recession's Impact on Job Growth http://bit.ly/InTheRed or http://www.stateoftheusa.org/content/the-recessions-impact-on-job-g.php

Posted by: anthonyjcalabrese | August 25, 2010 12:30 PM | Report abuse

Seriously? The operative words are "MAY HAVE"...

Does anyone actually believe this garbage? 3.5 million jobs?!? Where? In DC?

Posted by: Anonymous | August 25, 2010 2:30 PM | Report abuse

OK - if i give the 3.3 mil "new" (or saved - however that is measured) jobs, that means it cost ONLY approximately $260,000 per job. What a deal!!

Sure hope on one gets fired or laid off.

Posted by: tgp1 | August 25, 2010 2:53 PM | Report abuse

Propaganda for sure. Never in American history have we ever seen a President so dishonest as to attempt a " Jobs Saved" number. I wonder if Bush should have proposed a WMD prevented statistic? How many WMD would Saddam now own.

Posted by: Anonymous | August 25, 2010 2:57 PM | Report abuse

First of all, the CBO is the Congress' budget person. He is not appointed by the President. However, when things didn't look good for Obama's healthcare proposal, Obama and his budget guy, OMB Director Peter Orszag (who is appointed by the President), summoned the CBO into their office. Do you think this meeting was of a bi-partisan nature or a dressing down for his analysis?
How much credability do we give the CBO? I say he deserves none. First, he projected the costs of the stimulus plan to increase to $864B, now he says $814. He said that healthcare was going to cost $900B, but now he revised it to $1.15T (May 12, 2010). We need someone who will give us the correct information. In the private sector (the real world), he would have been fired for incompetence.
Lastly, we have seen two increases in unemployment benefits and another bailout for public officials in the past year. Do these entitlements reflect in his stimulus numbers? No, since they were done after the fact. However, these are the same projects that the stimulus plan was supposed to take care of. The same game that we got with healthcare - the doc fix was intentionally left out to make it look profitable.

Posted by: slake2 | August 25, 2010 3:36 PM | Report abuse

$830 Billion in Bush tax cuts for the top 2% over the last 8+ years = 10% Unemployment. $870 Billion in Obama Stimulus for everyone over the last 19 months = 9.7%. Just saying.

Posted by: Anonymous | August 25, 2010 3:37 PM | Report abuse

Does anyone with even the slightest bit of intelligence actually believe this?

Posted by: Anonymous | August 25, 2010 7:45 PM | Report abuse

I cant beleive this far into the game and people are still defending the Obama. Obama is and will ever be the worse thing to happen to America.

Posted by: Anonymous | August 26, 2010 3:02 PM | Report abuse

Sadly, the Democrats have totally bankrupted the country by flooding it with hundreds of billions of dollars of wasted money going to "stimulus," instead of productive growth.

They have only worsened our financial future with their silly voodoo economics, which primarily consists of indirect payoffs to their political supporters and themselves, that will now be billed to the rest of us Americans. The result: fewer and fewer productive Americans supporting more and more people "on the dole," one way or another.

The corrupt system of voting benefits to yourselves at the cost of those actually producing must collapse at some point, with devastating results. We are now there.

Unfortunately, the economic historians will recall these as America's darkest days under the corrupt socialist Democrat regime.

While the Obamas spend their time in engaging in exorbitant vacations and trips, and the Clintons have a $3 million wedding for their daughter, and the rest of the Democrat elite lives it up, real Americans suffer. They have not a clue what is really happening in the country.

We will remember in November.

Posted by: JimthePuritan | August 26, 2010 4:33 PM | Report abuse

I saw Fox News (the glorious channel for repubs) posted a CBO report that the stimulus had apparently cost more then the Iraq more from a deflicit perspective yet they won't post this report? Sorry, that goes against their fear driven narrative that the democrats will are dining on first born babies of jesus, i mean glenn beck.

I find it hilarious that people that don't like Obama - he's suddenly a dictator, nazi, marxist, something-ist who is corrupt and whatever. Whatever gets them through the night instead of realizing that he was democratically elected by the majority of votes and enacting laws that he promised during the campaign.

If you don't like it, then that's your god given right. I hardly agreed with Bush policies, but I never called him a dictator or undemocratic.

Keep in mind, the wack-job liberals called Bush the same thing during the last 8 years so I expect the wack-job conservatives to come up with just as crazy things.

Psst, also America has always had a debt sans a few years in the 1800's. Obviously it grows over time -- sorry if that doesn't jive with your crazy rants. :(

Posted by: Anonymous | August 30, 2010 5:53 PM | Report abuse

It's true though. They all subscribe to Keynesian economic theory because it benefits them the most. They saw Hayek's criticism that objected to Keynes on the basis that Keynes would eventually lead to banker/elitist control and ran with it...it's not a conspiracy, it's just a natural progression of a flawed theory.

Posted by: Anonymous | August 31, 2010 3:21 PM | Report abuse

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