Stimulus will have an uncertain impact in N.C.
By Ryan Teague Beckwith
The News & Observer
February 18, 2009
The White House estimated that the $787 billion stimulus package that President Barack Obama signed into law Tuesday afternoon would create or save 105,000 jobs in North Carolina over the next two years. Nationally, it estimated 3.5 million jobs.
But the math behind those estimates is a patchwork of best guesses, historical analogies and academic theories. ...
Mark Vitner, a senior economist with Wachovia bank, said the estimates are probably a little high, but still within reason because they are not "wildly optimistic." He said there's no real way to know how many new jobs there will be because of the stimulus effort. ...
It did not release the exact calculations used to produce the estimates. The analysis it cited was from January and was based on a hypothetical stimulus package, not the one actually passed by Congress.
"It should be understood that all of the estimates presented in this memo are subject to significant margins of error," the authors of the analysis wrote.
Among the problems they cited: The model was not based on the final bill, the actual effects of the spending can't be known ahead of time, and the current recession is unusual in its size and causes. ...
Mike Walden, an economics professor at N.C. State University, said he thinks Obama's advisers are overestimating the number of secondary jobs created by new spending on things such as roads and schools.
He said the extra work may be offset by the effects of massive government borrowing on Wall Street. The debt incurred by the stimulus package, he argued, could "crowd out" private borrowing that would otherwise create jobs.
The White House also released estimates of jobs created in each congressional district.
Brent Woodcox, a spokesman for the N.C. Republican Party, said that was clearly motivated by politics and not economics.
But he warned it could backfire if the promised jobs don't actually materialize by the 2010 congressional elections.
"Putting that kind of specific number on a promise of jobs is very dangerous for the president," he said. ...
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