The Obama administration is defending its projection that the economic stimulus plan will save or create 3.5 million jobs in a new report to be released today, saying that the figure is a cautious estimate based on a "relatively conservative rule of thumb" about the national economy.
Many Republicans have criticized the administration's projections as untrustworthy and politically motivated. Rep. Paul Broun, R-Ga., said at a hearing last week that it may not be possible to accurately determine whether the stimulus hits its job creation target. "Very probably, these numbers are just picked out of the clear blue sky and are not authenticated or authenticatable," he said.
On Friday, the Labor Department announced that the unemployment rate hit 8.9% in April and that the economy lost 539,000 jobs last month for a total of 5.7 million jobs lost since the recession began in December 2007. Federal Reserve Chairman Ben Bernanke said earlier last week he expects unemployment to peak next year short of 10%, but it could remain high for some time.
The new report by the White HouseCouncil of Economic Advisers offers more details about the projected impact of the $787 billion stimulus package, which Obama signed into law in February. The figure of 3.5 million jobs saved or created, the report says, is the difference between the projected number of jobs during the last three months of 2010 with the stimulus and the projected number of jobs without if there had been no stimulus plan.
The report also offers a new measure of the stimulus law's economic effects: 6.8 million additional job-years between the signing of the legislation and the end of 2012. A job-year represents one job held for one year.
Christina Romer, Obama's top economic adviser, said the administration's goal has been to come up with realistic estimates, not to manipulate the numbers for political purposes. "Accuracy has always been the main thing, not the political back-and-forth," Romer said in an interview Saturday.
The jobs figure, for example, is based on economic models that use historical data about the effects of government spending and tax cuts on employment as a whole rather than specific projects in the stimulus bill, she said. Romer said she did not use job-creation models that estimate hiring related to each specific project because they would have produced too large an estimate. "We want to make sure our reporting is above reproach," she said.
The administration's practice of discussing jobs saved as well as created is "a very clever device for providing future political cover," said University of Chicago economics professor Steven Davis. "The 'jobs saved' part was a way for them to say, 'The economy is still shrinking, but it would have shrunk faster but for the good things that we did.' "