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White House: stimulus on pace for 3.5 million jobs

WASHINGTON – The Obama administration defended its claim Monday that the $787 billion economic stimulus plan will save or create 3.5 million jobs before 2011, an assertion questioned by some economists and GOP lawmakers.

A report by the White House Council of Economic Advisers says the projections are based on conservative estimates and widely accepted assumptions. The 3.5 million job estimate remains valid, the report says, now that stimulus money is starting to pay for various projects throughout the nation.

The report says the analysis is based on what the CEA considers “the relatively conservative rule of thumb that a 1 percent increase in GDP corresponds to an increase in employment of approximately 1 million jobs,” the report says.

However, it also notes that every increase in the GDP does not translate into new jobs. Existing workers absorb some of the increased economic activity by working longer hours and being more productive, it says.

Models that predict the number of U.S. jobs with and without the stimulus still conclude that the bill will create or save 3.5 million by the end of 2010, the report says.

Many economists say it is difficult to calculate how many jobs are “saved” by a spending package designed to pump up the economy.

Republican officials have criticized President Barack Obama’s projections, calling them unduly optimistic efforts to quantify something that is extremely difficult to quantify.

Monday’s CEA report was seen in part as an effort to answer such criticisms.

It says job creation that can be attributed to the stimulus package “rises over 2009 and 2010, as the stimulus increases, and then falls as the fiscal stimulus is withdrawn.”

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