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  • PolitiFact Declares Century-Long Economics Debate Over

    For most of a century, macroeconomists have debated the pros and cons of government “stimulus” policies. Because there is no way to determine how the economy would have performed without a stimulus, the debate comes down to dueling economic models, assumptions, and theories. With Nobel Prize-winning economists lining up on both sides of the issue, the debate has seemed destined to continue. Apparently, that is, until now.

    PolitiFact – a group of reporters affiliated with the St. Petersburg Times in Florida – has declared the debate over. In a “fact check” column, they have declared from on high that the last stimulus bill successfully created or saved 1 million jobs so far, and will create or save 1 million more in 2010. End of debate, right?

    Typically, fact-checking is limited to checking, well, verifiable facts. Whether the budget deficit is rising, how much Washington spends on Social Security, and what provisions are in the latest health care bill are not open to interpretation. They can be verified factually.

    Whether the economy would have performed better or worse without the President’s $862 billion stimulus is an analytical and theoretical argument. It is not a “fact” to be “checked.”

    PolitiFact’s analysis displays a lack of understanding of the complexities of macroeconomic analysis. They cite as a “consensus” four studies claiming that the stimulus worked – yet those studies were all essentially Keynesian economic models, so of course they will declare that a Keynesian stimulus worked.

    For example, PolitiFact cites a Congressional Budget Office (CBO) study claiming the stimulus saved (a middle estimate of) 1.5 million jobs. Yet CBO didn’t determine this from observing recent economic trends. Instead, they “proved” the stimulus created jobs by programming their economic model to assume that stimulus spending automatically creates jobs – a classic example of the begging-the-question fallacy.

    PolitiFact included no economic models from other schools of economic thought, such as supply-side or neoclassical. Nor did they consult the multitude of economists who have concluded that governments cannot spend their way out of recessions.

    Instead, they openly dismiss the entire population of conservative economists, saying that “With the notable exception of conservatives, the independent economists who have produced studies agree that the stimulus has saved or created upwards of 1 million jobs, and that the bill will likely create another million or so jobs in 2010.” [emphasis added]

    PolitiFact does quote the Heritage Foundation’s more critical view of the stimulus – and then dismisses it simply because it conflicts with the more liberal Moody’s Economy.com.

    These macroeconomic debates are complex, technical, and messy. There is no verifiable way to determine how many jobs the stimulus has saved or created. PolitiFact’s reporters are free to believe the stimulus saved or created millions of jobs, but such an analysis belongs in an opinion editorial – not a fact check.

    Posted in Economics [slideshow_deploy]

    21 Responses to PolitiFact Declares Century-Long Economics Debate Over

    1. Bobbie Jay says:

      various, multiple inside jobs. Where's the trust? As long as there are questions the debate is NEVER OVER!

      The American government is nothing but thieves, liars and cheats! Incompetent in their jobs and the American people they lead.

      More specifics. What are the exact 1.5 million jobs saved? What are the exact jobs created?

    2. John B. San Diego says:

      Thank you, Mr. Riedl for your appearance on CSPAN recently.

      Common sense should prevail here Sir, when if ever has some person, government, or corporation purchased prosperity? Those entries can purchase investments, and it at that point becomes a risk based on facts and in today's world algorithms.

      I am of the opinion we should base our investments on common sense.

      We are in uncharted territory and should use common sense instead of high risk projections or use the influence of advisors whose experiences have delivered us to our current finacial position. I don't trust banks! I don't trust anyone who used to run a bank to bring us common people out of this economic disaster. Persons that used to run a bank have a conflict of interest in making Americans WHOLE

      The monetary wizards and economic experts admit they have never seen this before. Why do we trust them? What happened to the equity we Americans had in our homes and retirement accounts? According to previous bankers our equities simply vanished into thin air. Well I say hogwash B.S. and lies is what previous bankers spew. Forgive me Brian if you are a former bank executive.

      Some group has robbed us Americans, WE want our money back and I want the robbers in prison…FOR EVER! Let's file a class-action lawsuit Americans for return of our equity! And stop bailing out all these robbers!

    3. Barbara F Delo says:

      One thing is undeniable…we are leaving the next generation with a vastly expanding burden of debt.

    4. Bobbie Jay says:

      As long as there are unanswered questions, no debate is over, COWARDS!

    5. Dexter60, San Franci says:

      Personally I do believe that debate is truly over and it's time for a rousing call to action.

      Enough if these looters, operating under the color of authority.

      Sad to say, we will never see justice done; but we can try to get those that deserve it a speedy chance to grope about the nether regions seeking those 72 virgins as their counterparts had been so easily promised.

    6. West Hutchison says:

      $862,000,000,000(stimulus amt)/1,500,000(supposed jobs) =$574,666 (spent per job supposedly saved). Even if the stimulus did in fact save 1.5m jobs, this is a horrible investment.

    7. Ozzy6900 says:

      We could all sleep a little easier if Washington would just stop spending money on wasteful things! The Government has gotten so big that the "head can no longer see the tail"! Stop Spending and Start Cutting!

    8. Rich Stewart, Carlis says:

      I stumbled across this PolitiFact site a while back in reference to a criticism of a posting at the American Enterprise Institute blog concerning the "lightness" of the Obama administration in private sector experience when compared to prior administrations since 1900.

      A. These PolitiFact guys are lightweights and were in way over their heads in critiquing the J.P. Morgan study chart posted at the AEI blog (http://blog.american.com/?p=7572).
      B. There are no words to describe how far an examination of economic models is beyond their meager "analysis" skills.

      C. The name of this outfit should be shortened to just "Politi" since they would recognize a "Fact" if you hit them over the head with it.

    9. Longhorn Grad, Austi says:

      You should see the new Texas version of PolitiFact. They are so biased it makes me sick. These fact checking organizations are basically slanted editorialists with more built-in credibility backing them because of the name. FactCheck.org is the same way. Sometimes they are right, but a lot of times they need their own facts checked.

      Gardner Selby and the people running the Texas version of PolitiFact should be ashamed of themselves. They do the public a serious disservice with their authoritative lying.

    10. Jeanne Stotler,Woodb says:

      No one takes the fact that there are people who don't get counted when they tote the unemployment figures. the first are the self employed who are making a lot less and are in danger of or have lost their businesses, then we have those who have exhausted their WORKMANS COMP and then there are those who work part time or at jobos way below what they made, and what about those who graduated in June 09 and cannot get jobs, they are not counted either, if TRUE figures were given our unemployment is most likely about 15%. I know the later group to be true, I have 2 grandsons that live with me, both are HS grads and go to college part-time and CANNOT find jobs, I have a son who has a home repair business and he barely makes enough to cover his rent and food, he used to have money ahead and could take off a week occassionaly, NO MORE, another son lost his job as a surveyor, went to Louisianna for a year just to keep a roof over his son and diasabled wife, now is back in Fla. but is making a lot less than before. Stimulas was a sham, this administration is all smoke and mirrors.

    11. William Person says:

      How is it that Keynesian economics never includes the impact of ever increasing govenrment debt? It is the one area I never hear them account for. ONLY in our households is the cost and impact of debt included!!!

    12. Rick74 says:

      Well, the President and his faithful mouthpiece Vice state that we have been saved from a great depression.

      Many folks I know remain depressed. Greatly.

      Teachers in Virginia do not feel hopeful with the changes imminent in budget cuts for next year. Stimulus monies staved off huge (and getting huge-r) state deficits and kept some teachers and police on the payroll, but …

      Eventually, the private economy must grow and provide the tax base we need so that Washington stops playing Atlas with all Federal, state, and local public-sector jobs and we stop getting stuck (and stuck-ier) with the overwhelming bill for Washington largesse.

      The hope-y change-y thing costs money. The bill for this hope-y change-y thing is coming due.

      We might … hmmm … just tax the bejesus out of oil and coal industries and everyone making more than $250,000 (and not a penny less) => That will get teh private sector moving again!!!!

    13. Jim, Maine says:

      Figures lie, and liars figure. It's an axiom!!

    14. Lloyd Scallan - New says:

      The first clue to this pile of LIES is the word "TIMES" after the words St Petersburg, as in the "New York Times". The left-wing, liberal news media really believes we are all stupid and believes anything they print or say. Unfortunately, they are correct in part, because, in fact, many Americans are too stupid and trusting. They do not or will not accept the fact that almost every one of the news media outlets, not only in this country, but worldwide, are in the tank for Obama, and a major reason he is in, and remains in the White House today. Just look at the polls. How can Obama still have an approval rating of around 50%? One answer I can think of is the recent poll that showed 53% of Dems favored

      Socialism.

    15. Duane Phinney Pensac says:

      Yes there were some jobs saved, all public sector government/union jobs.

      That helps a lot.

    16. Sam, WI says:

      One cannot measure the succes of an economic stimulus (or any bill dealing wiht the economy) by the number of jobs "saved". Since all it takes to "save" a job is for an employer to not fire someone, you cannot measure the number of jobs "saved" by stimulus bills.

    17. William, Malta, Ohio says:

      Perhaps the current economic environment would have been the answer to Politifact's problem of having no facts on if a stimulus were NOT provided. We've wasted over 700 billion dollars and there has been absolutely NO improvement in the economy thus far. We could have supplanted plenty of information had the obama administration NOT sunk us all into the depths of debt. At least we'd have some empirical data upon which to decide upon in the debate. At least now we know the NEGATIVE side of stimuli in this particular economy, so the debate is clearly NOT over as yet. I can say with some certainty, however, that putting forth ANOTHER stimulus in THIS economy WILL NOT improve it one iota. Au contraire, it will have the exact OPPOSITE effect!

    18. John B. San Diego says:

      Yeah and one more thing the U.S. Gov. Lectures about becoming too big to fail; look who is getting too big, those hypocrites have some unemployment benefits coming..

      Gov. Officials talk of tough times and difficult decisions Americans having to tighten our belts.

      Meanwhile we have a Federal Government preaching do as I say not as I do!

      All that time growing bigger and bigger and BIGGER, well they are doing this on American citizens' dollars "They Have No Dollars" and "The Dollars Being Spent Don’t Belong to US!"

      Those dollars belong to untold generations of yet to be born innocent citizens; I predict future generations will curse us, because we cursed them with our irresponsible inaction compounded by misguided actions.

      When is government too big and who will bail our nation out; look at Greece.

    19. Judy, Mass says:

      How about the waste? 2010 Census for one. Our tax dollars right. How about the new Federal, State and Local jobs saved with this stimulus $s? Unions jobs correct? Oh! How about the pay scales for just an office job? Average wage $70,000 versus $40,000. Doesn't that just frost your A–. People are losing the houses, cars, life savings, etc. What the heck is going on? We need to vote them out in 2010 and 2012. The house needs a good cleaning out and that's not with a dust pan and brush. It's with brooms and they can all get their rear ends on them and don't let the door hit you on the way out. We are going to get our Country back. Check out this website, google it (Frontlinethewarning). It a 1 hr. video that is a must to view. Respond back after viewing. Interested in comments from you folks.

    20. John B. San Diego says:

      Obama's so-called jobs created or saved amounts to encouraging "The States and Local Govs" to not deal with real-time budget problems.

      What happens with those saved jobs when federal stimulus is exhausted?

      The jobs saved I agree with being saved through the federal government spending are; "First Responders' Jobs" notice I didn't say First Responders' Retirement or Benefit Programs" ;just keep them on the job and let state and local gov deal with the rest.

      Other than those jobs Obama has a few pet projects receiving green energy money, the rest of us suck hind t**.

      Without creating real jobs (those whom are gainfully employed and contribute to the revenue base for local all the way up to federal) ,stimulus funds (DUDS) will be disbursed and the jobs saved will disappear and the private sector will continue to diminish and small business will not invest due to lack of demand.

      In short get did of Sec. Giethner, Advisor Summers, C.O.S. Emanuel and last but not least Pres. Obama.

    21. Drew Page, IL says:

      WOW!! Happy Days are here again. We can all sleep well tonight. POLTIFACT, America's #1 economic authority of said the Stimulus bill created a million jobs?? If they said it, it must be true.

      Now all we need are seven more $850 billion Stimulus bills and we will have eliminated unemployment.

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