Senate Majority Leader Harry Reid, D-NV, and Senate Appropriations Committee Chairman Robert Byrd, D-WVA, have issued a news release claiming their $13.5 billion economic stimulus package will “create” 470,000 jobs. Unfortunately for Reid and Byrd, somebody at The Heritage Foundation – budget analyst extraordinaire Brian Riedl – actually checked their numbers and sources and found something quite interesting.
Namely that Reid and Byrd based their claim on a recent study by the Department of Transportation, but they mis-read/misused/misquoted the study. Riedl explains in an email alert this morning:
“Hi, everyone, the press release of the new Senate Democrat stimulus plan blares the headline ‘Reid And Byrd Unveil Economic Recovery Package That Creates More Than 635,000 Jobs’ (http://democrats.senate.gov/newsroom/record.cfm?id=305042&
“It further specifies ‘The stimulus package includes: $13.5 billion for building and repairing highways, bridges, mass transit, airports, and AMTRAK, creating 470,000 jobs.’
“This is completely false. Senators Reid and Byrd’s numbers are based off a recent DOT study that they claim states that each $1 billion in highway spending creates 34,779 new jobs. But the DOT document itself openly states that this ‘jobs creation’ interpretation is false.
“On page 2 of the April 7, 2008 DOT Document – which is attached – states ‘the estimated jobs figure used at all, should be used carefully – the FHWA analysis to “jobs supported by highway investments, not jobs created’ (italics in original).
“Again…..it says ‘not jobs created.’
“The DOT says spending $1 billion on highways would require 34,779 workers. But before the government can spend $1 billion hiring road builders and purchasing asphalt, it must first tax or borrow $1 billion from other sectors of the economy, which then lose a similar number of jobs. In other words, highway spending merely transfers jobs and income from one part of the economy to another. No new jobs are necessarily created.
“For more explanation of why DOT, GAO, and CRS have generally concluded highway spending does NOT create nearly as many jobs as this press release would indicate, see Ronald Utt, ‘More Transportation Spending: False Promises of Prosperity and Job Creation,’ at http://www.heritage.org/Research/budget/bg2121.cfm. And Brian Riedl, ‘Why Government Spending Does Not Stimulate Economic Growth’ at http://www.heritage.org/Research/Budget/bg2208.cfm
“Before Congress allocates $13.5 billion to ‘create jobs,’ the least we should expect is that the studies defending such policies are represented correctly.”
So, let’s do an experiment and see how long it takes, Byrd and Reid to issue a clarification of their release, including a revised jobs creation figure. And let’s see whether reporters covering the story at The Washington Post, The New York Times, The Washington Times and The Los Angeles Times include Riedl’s point and challenge Reid and Byrd to respond to the Heritage scholar.
