Why Hasn’t the Biden Administration Issued its Own Stimulus Job Creation Estimates?
One of policymakers’ key goals for federal stimulus legislation is to create jobs. Yet supporters of the Biden administration’s $1.9 trillion American Rescue Plan have so far only parroted forecasts by outside experts instead of issuing their own job-creation estimates. That contrasts with the last Democratic-drafted stimulus law in 2009, when the Obama administration issued detailed projections for job creation that went on to fall far short of reality, contributing to Democrats losing the House majority in 2010 elections. While that experience may explain current stimulus supporters’ reliance on outside estimates, it’s unlikely to insulate them from blame if today’s plan similarly fails to create the jobs they suggest it will.
With the number of people collecting unemployment checks remaining at pre-pandemic record levels, job creation should be a major theme of any stimulus legislation. Yet White House estimates for job creation from the president’s plan are spelled out only in a brief blog post, which cites solely the estimates of outside experts. The blog points to an analysis by Moody’s Analytics, which projected the creation of “4 million jobs in 2021” compared with “a baseline without additional fiscal stimulus.” President Biden subsequently quoted another “independent analysis” by a DC think tank suggesting the plan “could achieve…full employment by the beginning of next year.” That report estimated that under the plan “the unemployment rate would temporarily dip to 3.2 percent” in the period “from the fourth quarter of 2021 to the second quarter of 2022.” If so, that would mark the lowest unemployment rate since 1953.
Depending on such outside experts is a significant departure from the last Democrat-led stimulus. In January 2009, the incoming Obama-Biden administration released a detailed report known informally as the “Romer-Bernstein report” after the chief economists of the president and vice president. That report projected the February 2009 stimulus law would quickly create millions of jobs and hold unemployment under eight percent. Neither occurred, and as Politico recently noted “The economic bounceback ended up being far slower than anticipated,” contributing significantly to Democrats losing the House majority in 2010.
It’s worth noting the four million new jobs projected by Moody’s under the administration plan would accelerate what is already expected to be a rapidly recovering labor market. The nonpartisan Congressional Budget Office (CBO) on February 1 provided the “baseline without additional fiscal stimulus” for jobs ahead. CBO projected over six million new jobs would be created between the fourth quarter of 2020 and the fourth quarter of 2021, or an average of 521,000 per month — without the administration’s stimulus plan. Adding four million jobs “in 2021” attributable to the president’s plan suggests the White House believes that, under their plan, payroll employment will be some 10 million jobs higher at the end of 2021 than it was at the end of 2020. That would require creating between 900,000 and 1,000,000 jobs per month for the rest of this year.
As they began formal legislative action on the president’s plan, Congressional Democrats have so far repeated the same job creation claims. House Ways and Means Committee Chairman Richard Neal (D-MA) said, “According to Moody’s, if we don’t act now, we could put 4 million jobs in jeopardy this year. Potentially pushing full employment even further out into next year.” Speaker Pelosi, in a press release titled “House Republicans Vote to Block 10 Million American Jobs,” pointed to the Moody’s analysis but appeared to conflate the six million new jobs projected by CBO even without the president’s plan with the four million additional jobs Moody’s forecast under it.
Citing outside experts about the supposed job-creation effects of the administration’s signature stimulus plan is a significant departure from how Democrats marketed the expected effects of the last stimulus law they crafted in 2009. Hopefully any stimulus in 2021 will be far more successful than that 2009 law was, and nearly 1 million new jobs are created each month and unemployment falls to historic lows, as supporters suggest. But if today’s stimulus once again falls short of supporters’ job-creation claims, they shouldn’t expect their reliance on outside experts to protect them – and current razor-slim Democratic majorities backing it — from blame.
Matt Weidinger is the Rowe Fellow in poverty studies at the American Enterprise Institute.
