President Obama's economic advisers estimated Thursday that the economic stimulus package has saved or created about 1 million jobs, drawing immediate criticism from Republicans.
Christina Romer, the head of Obama's Council of Economic Advisers, said her team consulted other economists for its report to Congress on the likely effects of the $787 billion package of tax cuts, government spending and aid to states. The administration's million-job estimate, while preliminary and uncertain, was "in the middle of the plausible range" of estimates made by independent experts, she said.
"An economy that was in free-fall with a tremendous amount of downward momentum" is now improving in part because of the stimulus package, Romer said.
The analysis, required by the stimulus law, supported Obama's June claim that the stimulus had created or saved 150,000 jobs and would create or save 600,000 more by September.
Republicans called the White House estimate unreliable, pointing to Bureau of Labor Statistics figures showing a 9.7% unemployment rate in August and a net loss of 2.4 million jobs since Obama signed the stimulus law in February. Republican National Committee Chairman Michael Steele called the report "one more example of this administration's use of smoke and mirrors to mask the failure of the Democrats' costly $787 billion stimulus bill."
Rep. Kevin Brady, R-Texas called the White House report "fiction."
"There's no credible evidence it's jump-starting the economy," Brady said.
Romer acknowledged the U.S. economy is still losing jobs and unemployment is likely to hit 10% this year or early next year. She said her team's latest analysis did not estimate what the unemployment rate would have been without the stimulus package.
"You first have to moderate the decline before you start seeing increases, before you start seeing job growth," she said.
Romer said the White House advisers came up with their estimate using two methods: An analysis of the law's effect on the national economy and employment using historical data and another using a statistical model of the effects of tax cuts and government spending on job and economic growth. Independent economists' estimates and data from other countries that implemented their own stimulus plans supported the administration's conclusions, Romer said.
Michael Feroli, an economist at JPMorgan Chase, said the White House projections seem reasonable.
"They look, as you would expect, maybe a little more favorable in terms of the estimated impact, but not in a way that's incredible or unbelievable," Feroli said. "I don't believe it's quite as much as the administration claims, but I do think (the stimulus) has supported, and for a while will continue to support, economic growth."
Romer said she believes the stimulus package is on track to meet the administration's goal of creating or saving 3.5 million jobs by the end of next year.