Tonight, President Obama has warned the nation of dire economic consequences if the pile of garbage called a stimulus package isn’t passed immediately.
One of Obama’s key arguments for the stimulus package is jobs. In his oped piece today he warned:
Our economy will lose 5 million more jobs. Unemployment will approach double digits.
Just three weeks ago President Obama’s team released a white paper that argued for the stimulus package. I covered the inconsistency of positions that one of it’s authors, Christina Romer has between the white paper and her previously published postions here.
In the white paper, there is a chart that shows what will happen to unemployment with and without the stimulus package. With the latest report of new unemployment filings it is expected that the unemployment rate will rise to 7.5%, right in line with the white paper’s expectations.
From here, the white paper projects that with a stimulus package, unemployment will continue to rise and peak at approximately 8% in the third quarter of this year. Without the stimulus package, the paper projects that unemployment will rise, peaking at 9% in the middle of next year.
There are approximately 155 million individuals in the US workforce. If I do my math correctly and giving Obama the benefit of the doubt, the difference between 7.5% and 9% is 1.5%. 1.5% of 155 million is about 2.3 million.
When discussing unemployment figures economists always talk about the net number of unemployed. The reason for this is pretty straight forward. Even in the best economic times there are people who lose their jobs. Contrary to other economic systems, a capitalistic one does not provide cradle to grave employment. Nor does an employee have to work at the same job and same employer for their entire life. People move. If Obama was talking in the same terms that labor economists use than he is grossly exaggerating the increased unemployment that his own team says will come if their own predictions come to pass. However, even if Obama was talking gross he’s exaggerating.
In a typical year, an average of about 3 million people quit or change jobs in any given year. If Obama is suggesting that this year we will now have a total of 5 million people lose their jobs, that’s an increase of 2 million. I’m not suggesting that 2 million is nothing. Certainly to every person impacted, and their family, it is very significant. However, to suggest that spending $900 billion will keep 2 million people from going through the process of changing jobs…that’s a cost of $450,000 per job! We could just pay them in place for a cost that is a fraction of the $900 billion!
Obama has staked a significant portion of his political capital on this stimulus bill. It contains his first installments on all the Left believes they are owed for supporting his candidacy. Unfortunately, he took his eye off the ball and let Pelosi make a mockery of what was not a correct, but at least an honest effort by him. After the Republicans did an about face in the House and with the rapidly falling public support of the bill, Obama has resorted to an increasing scare hyperbole in an attempt to move the bill along.
Obama needs to be careful. While I don’t think the bill won’t pass, he only needs to pick off two of the weak Rinos, he will likely not get more than just that couple. After using the “give it to me or it will get waaaaaaay worse,” if the bill passes, he’d better hope that things improve and fairly soon. If not, no amount of “things were worse than we thought” explanations, will restore credibility with the public and allow him to use the scare card in the future.
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