The White House was awfully happy when the Labor Department reported that 308,000 jobs were created in March. It was the strongest month for new employment since Clinton was in office and it was the first time in nine tries the economy created as many jobs as Bush said it would — an impressive 11% success rate — after the most recent round of tax cuts.
Bush’s rhetorical line is predictable, but flawed. Naturally, the president said one month of success proves that his tax cuts are effective in creating jobs. But as a cost-benefit analysis, this really doesn’t make any sense.
The Gadflyer’s Paul Waldman did the math. It’s not a pretty picture.
The recent report from the Bureau of Labor Statistics that the American economy created 308,000 jobs in March was greeted by President Bush with a proclamation that “The tax relief we passed is working.” Naturally, Democrats took issue with Bush’s conclusion. But for the sake of argument, let’s assume Bush is right, and the tax cuts led to the job growth. We at The Gadflyer thought we’d do some quick math to calculate just how much each of the jobs Bush has created cost the American government.
Since Bush is already pretty deep in the hole when it comes to jobs — and it’s going to take some pretty fantastic job growth to put him in the black — I decided to give him the benefit of the doubt and put the most optimistic spin possible on things, assuming that the economy will continue to create jobs at its March pace. So I’ve made some projections into the future in order to calculate the cost per job of Bush’s tax cuts.
In order to add up the cost of the Bush tax cuts, you have to look at two sets of numbers, the cost if the cuts “sunset” and the cost if they don’t. When the Republicans passed the tax bills, they set the cuts to magically disappear in later years, as a way of hiding their true cost. The assumption was that eventually Congress would make the cuts permanent. And in fact, that’s just what Bush is campaigning for right now.
So what did they cost?
2001-2010, with sunsets: $2.29 trillion
2001-2010, without sunsets: $3.25 trillion
Those are the overall costs to the taxpayers, once all of that money is added to what is already the largest debt in U.S. history. Since many of the most expensive elements haven’t taken effect yet, the cost of the tax cuts from 2001 to 2004 is just $749.1 billion. And really, what’s three-quarters of a trillion dollars between friends?
Keep in mind, Bush insisted that the purpose of these tax cuts was to create jobs. In various State of the Union addresses, the president made all manner or promises about the robust employment market we’d see if only we’d listen to his sterling wisdom and pass his tax cuts for the wealthy. Waldman’s task was to explore just how useful the investment has been.
[L]et’s say the economy continues to create 300,000 jobs a month from here to the end of the year, something even the pollyannas in the Bush administration wouldn’t predict. At the moment, Bush is still 1.84 million jobs in the hole, but 9 more months at 300,000 jobs per month would leave him at the end of the year with a net of 860,000 jobs created for his first term. That gives us the following:
$749.1 billion (cost of tax cuts, 2001-2004)
/ 860,000 jobs
= $871,046 per job
Those must be some jobs.
Not exactly the most cost efficient way to provide work for 860,000 people, is it? Reading this, one naturally imagines how much cheaper it would be for the government to just pay people directly, instead of waiting around for the “trickle down” to take effect. Fortunately, Waldman covered this as well.
Perhaps it’s time for reporters to begin asking President Bush and his spokespeople just how much they think it should cost to create a single job. Right now there are approximately 10 million people out of work in the United States. If we gave each of them $143,512, it would cost $1.43 trillion, less than half the ten-year cost of Bush’s tax cuts if they are made permanent.
Now there’s an idea.