CBO Refutes Republicans: Stimulus Saved Or Created 600,000-1.6 Million Jobs

AP090423049536When the Obama administration announced that the American Recovery and Reinvestment Act (i.e. the stimulus) had saved or created 640,000 jobs, Republicans quickly launched into a tirade. The Republican National Committee said that “it is clear the Obama administration is trying to cover up economic reality by manufacturing job numbers out of thin air,” while Rep. Darrell Issa (R-CA) wrote that “the American people have been subjected to an aggressive propaganda campaign” as “the administration has sent its spinmeisters out to trumpet an altogether dubious number of jobs ‘created or saved.'”

Well, last night, the Congressional Budget Office (CBO) released its latest estimates of the stimulus’ impact, and as it turns out, the 640,000 number was pretty spot-on:

CBO estimates that in the third quarter of calendar year 2009, an additional 600,000 to 1.6 million people were employed in the United States, and real (inflation-adjusted) gross domestic product (GDP) was 1.2 percent to 3.2 percent higher, than would have been the case in the absence of ARRA.

CBO noted that, to date, the stimulus has increased federal outlays by about $100 billion and reduced taxes by $90 billion, adding that “economic output and employment in the spring and summer of 2009 were lower than CBO had projected at the beginning of the year. But in CBO’s judgment, that outcome reflects greater-than-projected weakness in the underlying economy rather than lower-than-expected effects of ARRA.”

This obviously doesn’t mean that all is rosy in terms of employment. As the Wall Street Journal reported today, “the number of people involuntarily working part-time jobs has more than doubled to 9.3 million,” which is the highest on record. The average workweek “has fallen to 33 hours, the lowest level in the post-World War II period.” Meanwhile, the stimulus funds earmarked for small businesses have already run out, which “could set the stage for further business credit contractions.”

So with the knowledge that the stimulus is working as planned, in an economy that is weaker than forecast, will Congress find the stomach to step up on the jobs front? Or will deficit fearmongering leave it content to muddle through, leaving unemployment — and all of its detrimental economic effects — unacceptably high?