Yesterday, we pointed out that taking Obama’s numbers at face value, i.e. the Stimulus “saved or created” 3.5 million jobs … almost $250k was (or will be spent) for each job saved or created.
A couple of loyal readers replied that “only half of the Stimulus money has been spent so the cost is only about $125k per job saved or created”.
First, $125k is still a lot of money per job.
More important, all of the money will eventually be spent and the total claim for jobs saved or created is 3.5 million … so we’re back to the $250k number.
Most important, let’s merge the 2 ideas: Romer says 3 million jobs saved or created are in the books … since $425 billion has been spent (1/2 of the total Stimulus) … that means that the spending per job has been just under $150k.
But, the next $425 billion will only save or create 500,000 jobs … that works out to about $850,000 per job.
It’s called “diminishing returns” … and it illustrates – using Obama’s own numbers – why throwing more stimulus money at the problem is a bad idea.
The Homa Files 