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SEPTEMBER 9, 2009 | Commentary by NATHAN BENEFIELD
Whoops, We Were Wrong...
One of our goals at the Commonwealth Foundation is to predict the effect of proposed public policies. Most of the time, we are proven correct, and humbly announce, "We told you so!" But sometimes, our predictions miss the mark. Case in point: in a November 2008 commentary, we predicted "Obama's presidency will likely be less radica
MAY 29, 2009 | Commentary by ELIZABETH BRYAN
Government Intervention Prolongs Recessions
Recessions are a tough time for all—many lose their jobs, family incomes shrink, and budgets are squeezed. But recessions are natural and, in the long-run, foster a stronger economy. It is important that policymakers recognize the ups and downs of the economy, and the lessons from past recessions, so as to not over-react to the curre
MARCH 17, 2009 | Commentary by NATHAN BENEFIELD
Free Markets: An Unknown Ideal
President Obama, Governor Rendell, and many in the media have been echoing a similar refrain recently, "Conservatives had their chance. We tried free markets, and they failed." When exactly they think citizens enjoyed free markets is unclear, but it certainly did not occur under the presidency of George W. Bush or under Gov. Rendell.
Recent Blog Posts
MARCH 9, 2010
Sign the Petition for an Independent Investigation of Dr. Mann
Penn State YAF's (Young Americans for Freedom) petition for academic integrity is now online! O
n February 12th almost a hundred students and citizens gathered to demand a fair and thorough investigation of Dr. Mann instead of the whitewash recently conducted by Penn State.
You can sign your name by going to www.yaf.com/petition. The petition will be delivered to the General Assembly asking them to conduct an independent investigation of Dr. Mann and his research which has widely influenced the scientific community and reaped millions in federal stimulus dollars.
posted by ELIZABETH BRYAN | 10:07 AM | 0 comment
MARCH 1, 2010
"Jobs Saved" Estimates were Pre-Determined
The Congressional Budget Office announced last month that 1.5 million jobs were created or saved by the $862 billion stimulus package, a number many use to claim the stimulus worked, and therefore we need another one.
But the CBO's numbers are based on an economic model that assumes government spending creates jobs. Using a predetermined multiplier the model computes GDP growth for every dollar the government spends; this number is then converted into jobs created.
* Every $1 of government spending that directly purchases goods and services ultimately raises the GDP by $1.75;
* Every $1 of government spending sent to state and local governments for infrastructure ultimately raises GDP by $1.75;
* Every $1 of government spending sent to state and local governments for non-infrastructure spending ultimately raises GDP by $1.25; and
* Every $1 of government spending sent to an individual as a transfer payment ultimately raises GDP by $1.45.
Hence, the estimate of jobs created is identical to what the model predicted before the stimulus passed, and bears no connection to what actually happened.
posted by KATRINA CURRIE | 00:35 PM | 0 comment
FEBRUARY 22, 2010
Did the Stimulus Raise Unemployment?
Alan Reynolds takes a nuanced approach to where stimulus funding went, and why it didn't "create jobs" or increase GDP, and probably increased unemployment:
[T]he GDP report clearly said the gain "reflected an increase in private inventory investment, a deceleration of imports and an upturn in nonresidential, fixed investment that was partly offset by decelerations in federal government (defense) spending and in personal consumption expenditures."
Since federal spending accounted for exactly zero of the only significant increase GDP, how could such spending possibly have "created or saved" 2 million jobs?
The bill was launched last year amid grandiose promises of "shovel ready" make-work projects.
In reality, as the CBO explains, "five programs accounted for more than 80% of the outlays from ARRA in 2009: Medicaid, unemployment compensation, Social Security ... grants to state and local governments ... and student aid."
In other words, what was labeled a "stimulus" bill was actually a stimulus to government transfer payments — cash and benefits that are primarily rewards for not working, or at least not working too hard.
In 2010, as in 2009, the ARRA is mainly a stimulus to government. ..
My own estimate, in past articles available at cato.org, is that the stimulus act added about 2 percentage points to the unemployment rate.
Andrew Cline also has a good piece on the logic of the stimulus and "job creation"
The question is not: How many jobs were funded by the stimulus bill? The question is: How many jobs would have been funded if that same money had been put to other uses? The American people seem to think, not unreasonably, that more jobs would have been created without the stimulus bill than with it.
posted by NATHAN BENEFIELD | 09:36 AM | 0 comment
