The CBO: Not Playing It Straight With Stimulus Estimates

by Pejman Yousefzadeh on March 3, 2010


Peter Suderman’s article on why we cannot trust CBO estimates concerning the value of the stimulus is a must-read:

Here’s what the Congressional Budget Office’s (CBO) most recent report on the matter estimates the stimulus’ effects were in the fourth quarter of 2009: Thanks to the stimulus, America is somewhere between 1 and 2.1 million jobs richer than it would have been with no government intervention. Federal dollars have fattened up our GDP as well, adding somewhere between 1.5 and 3.5 percent to the GDP.

Naturally, the Obama administration is keen to take credit. And in touting the CBO’s stimulus figures, the White House repeatedly employed the phrase “created or saved.” After widespread eye-rolling at such an obvious rhetorical gimmick—not to mention significant evidence that many of the jobs it was claiming credit for were not, in fact, created or saved—the administration altered its lingo and started referring to jobs “funded.” But this too is not as accurate as it could be, at least in the context of the CBO’s reports; a better phrase might have been “created or saved or estimated or assumed.”

That’s because CBO’s estimates are generated using models that significantly boost the figures provided by existing measurements (measurements which themselves have been called into serious question). To some extent, that’s understandable—determining how many jobs would exist in the absence of a policy is impossible to do with any certainty; no matter how good your models, building a counterfactual is always a guessing game. But it’s also a game that’s awfully easy to rig, or at least tilt in your preferred direction.

Read the whole thing. A note to mainstream media outlets: Suderman’s article represents the practice of what was once called “journalism.” Please try bringing that practice back into fashion. The nation would thank you if you did.

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