by Jill Fitzsimmons, in a Media Matters cross-post
Conservative media outlets are trumpeting a front page story in today’s Washington Post which claims that “Obama’s efforts to create green jobs are lagging behind expectations.” But the article relies on questionable math regarding the jobs impact of the Department of Energy’s loan guarantee program.
The Post wrote that the “$38.6 billion loan guarantee program” has directly created “3,545 new, permanent jobs after giving out almost half the allocated amount.” (DOE also estimates that the program has saved 33,000 jobs and added 7,391 temporary construction jobs) The article goes on to say that if DOE’s target of 60,000 jobs “is reached, it would work out to about $640,000 in loan guarantees for every job created or saved.”
But former White House economist Jared Bernstein called out the Post for its “bad math,” saying that “their emphasis on this $640K/job number assumes every loan defaults, which is implausible.”
Bernstein said that “the correct numerator” is not $38.6 billion, but the “credit subsidy” and “that’s likely to be well under $5 billion, which gets you into a much more reasonable neighborhood re bang-for-buck.” The “credit subsidy” is the amount of money set aside to cover “defaults and delinquencies, interest subsidies, or other payments” resulting from the loan guarantees. The stimulus provided $2.5 billion for the cost of the loan guarantees for renewable energy projects.
The Post did note that “If the companies do well, they won’t need to draw on the guarantees and won’t cost the government anything.”
Nevertheless, Fox News’ Stuart Varney seized on the article, falsely claiming that “if the program were completely successful” then each job would “cost” $640,000. Varney cited this “terrible number” as evidence that President Obama’s “green job program … is really not going well at all”:
Conservative blogger Jim Hoft also showed that he doesn’t understand the difference between loan guarantees and direct spending, claiming that “the Obama Administration spent nearly half of the $38.6 billion ($17.2 billion) set aside for his green energy programs and was only able to create 3,545 permanent green jobs. This comes out to a staggering $4,853,000 per job.”