White House credits stimulus


The Obama administration, offering evidence that its much-maligned efforts to spur economic recovery have begun to take hold, said Tuesday that the $787-billion stimulus program saved or created 1.5 million to 2 million jobs last year.

These latest figures from the White House Council of Economic Advisors are certain to be challenged by Republicans, but the employment and economic effects of the stimulus cited in the report are generally in line with estimates from some leading private economists as well as the nonpartisan Congressional Budget Office.

“This is truly a stunning effect” of the Recovery Act, Christina Romer, chairwoman of the council, said in a conference call with reporters.


She expressed confidence that the package of tax cuts and government spending -- the largest of its kind in U.S. history -- ultimately would fulfill President Obama’s promise of boosting employment by 3.5 million jobs by the end of this year. As of the end of last year, about a third of the $787 billion had been spent, although about half of the total has been committed.

The council’s report, mandated by Congress as part of the stimulus act and released late Tuesday, came as Obama mounted a full-court press to defend his record on jobs. That’s a major vulnerability for the White House and Democrats in Congress as they head into midterm elections in November with double-digit unemployment predicted for all or much of the coming year.

Even with the stimulus, the U.S. economy lost more than 4 million jobs last year, including 85,000 in December, according to the Labor Department. And the unemployment rate last month was 10% -- a figure that is widely expected to inch higher in the months ahead.

In its first quarterly report on the stimulus, issued in September, the White House estimated that the Recovery Act had raised employment levels by more than 1 million jobs as of the third quarter. The new report incorporates data from stimulus recipients who said they saved or created 640,000 full-time-equivalent jobs as of the third quarter.

The White House’s estimate of stimulus-induced jobs for 2009 is based on economic modeling and projections and as such is likely to be met with considerable skepticism from Republicans and other critics who have not only questioned the methodology but also documented cases in which stimulus money went to dubious projects.

Romer acknowledged that it was hard to make employment-creation claims when the economy had shed about 8 million jobs in the last two years. But she noted that job losses had declined dramatically since the first quarter of last year, when they were approaching nearly 700,000 a month on average -- far more than the approximately 69,000 a month lost during the fourth quarter.


Without the stimulus, Romer said, the economy would be as many as 2 million more jobs in the hole today.

In the same vein, she said, without the benefits of the stimulus, the economy would have shrunk instead of growing 2.2% in the third quarter.

The report estimates that the Recovery Act added 1.5 to 3 percentage points to gross domestic product growth in the fourth quarter, which is in line with estimates from professional forecasting firms such as Moody’s and IHS Global Insight. Many economists expect fourth-quarter GDP to show growth of 4% to 5% at an annualized rate.

Even so, employers have been reluctant to create jobs. And economists widely expect GDP growth to slow this year, prompting calls for additional government stimulus. Although the Obama administration has been reluctant to propose another large-scale spending plan amid sharp criticisms from deficit hawks, it is considering various ideas aimed at stimulating job growth, such as tax credits for hiring and help for small businesses and for certain potentially big employment producers such as so-called clean energy.

The report shows that the stimulus has been slow to create clean-energy jobs, which include wind- and solar-power generation, energy-efficiency retrofitting and high-speed-rail construction. Obama has made clean-energy job creation a centerpiece of his vision for job growth.

Though the Recovery Act includes $90 billion for clean-energy programs, only $5 billion has been spent -- with nearly half of that in the form of tax breaks for renewable-electricity generation and other areas.

Barely 5% of the $20 billion earmarked for efficiency and the $26 billion tagged for renewable-energy projects has been spent.

The Council of Economic Advisors report blames the green-job lag on the time-consuming process necessary to identify and evaluate potential recipients. The report said “most of the clean-energy investments occur through grants and contracts that require that proposals be reviewed before funds are expended.”

In total, the $5-billion clean-energy spending so far has created or saved about 50,000 jobs directly, a roughly $100,000-per-job expense.

The White House estimates that the clean-energy spending will end up bankrolling 720,000 “job-years” by 2012, which is the equivalent of 720,000 jobs lasting one year each.