Rove latest Fox News figure to promote false calculation of stimulus' job-creation costs

Original Link: http://mediamatters.org/items/200901290016

Summary: Karl Rove falsely claimed that the economic stimulus bill would amount to spending "$206,000 for each new job that [President Barack Obama] wants to get," becoming the latest Fox News figure to repeat the false calculation. In fact, by calculating the per-job cost by dividing the estimated total cost of the recovery bill by the estimated number of jobs created -- and thus suggesting that the sole purpose of that package is to create jobs -- Rove ignored other tangible benefits stemming from the package, such as infrastructure improvements and investments in education, health, and public safety.

On the January 28 edition of Fox News' The O'Reilly Factor, Fox News contributor Karl Rove falsely claimed that under the American Recovery and Reinvestment Act of 2009, "we're going to be spending $825 billion or $206,000 for each new job that he [President Barack Obama] wants to get." Rove then said that if you add "the $347 billion in interest costs on the next 10 years on the money we're spending, that's another -- that brings the price for each job up to $290,000 per job." Rove is at least the third Fox News figure to make such a claim, joining host Sean Hannity and senior political analyst Brit Hume. Hannity again repeated the claim on the January 28 edition of Fox News' Hannity, saying to former General Electric CEO Jack Welch, "If we were to break down the dollars -- the Heritage Foundation analysis of this ... for every job we create, if we go to the high side of their estimate, $217,000 we'd pay for a new job."

However, as Media Matters for America has noted, by calculating the per-job cost by dividing the estimated total cost of the recovery bill by the estimated number of jobs created -- and thus suggesting that the sole purpose of that package is to create jobs -- Rove and Hannity ignored other tangible benefits stemming from the package, such as infrastructure improvements and investments in education, health, and public safety.

Economists, including Center for Economic Policy Research co-director Dean Baker, have criticized the claim for a different reason. Baker has argued that "[t]he cost is also wrong, or at least misleading. If we assume that the stimulus will work as planned, then it will boost GDP by approximately 1.5 times the amount of spending or $620 billion a year. If GDP rises by this amount, then it will translate into roughly $155 billion a year in higher taxes/lower spending than if we didn't do the stimulus. This is money that should be subtracted from the cost to the taxpayers." He continued: "So, if net out the increased revenue from the growth generated by the stimulus we end up with a 2-year cost of $515 billion which will generate roughly 8 million job-years. That comes to about $65k per job year, less than one-fourth of the Republicans' number."

From the January 28 edition of Fox News' The O'Reilly Factor:

O'REILLY: Now for the top story tonight: Fox News analyst and former presidential adviser Karl Rove has been subpoenaed by Congressman John Conyers [D-MI], the chairman of the House Judiciary Committee. And we also want to get Mr. Rove's view on the $900 billion stimulus package, which will absolutely be a reality, I think.

I think the Senate, Mr. Rove -- and he joins us from Dallas, I should say -- I think the Senate's going to trim some of this fat out of there. You know, 'cause some of it's pretty crazy. But it's going to get in. And we're going to spend more money than we've ever spent outside of wartime, trying to stimulate this economy.

First of all, you think it's going to work?

ROVE: I think it's based on a flawed premise that we can spend our way to prosperity. Remember, the goal here, according to President Obama, is to create 4 million new jobs by the end of next year. That means we're going to be spending $825 billion or $206,000 per new job that he wants to get.

If you take the $347 billion in interest costs for the next 10 years on the money we're spending, that's another -- that brings the price for each job up to $290,000 per job. And I think you're absolutely right. There's some good things in here, but there's a lot of bad things. There's some laudable things that won't create jobs; there's some laughable spending -- and you touched on a couple of them that won't create jobs.

And what troubles me is there are some permanent additions to federal and state budgets in the hundreds of billions of dollars a year that are going to be impossible for us to remove. We're going to grow government dramatically in this bill and I don't think get much bang for the buck.

From the January 28 edition of Fox News' Hannity:

HANNITY: Let me ask you this. Look, the Heritage Foundation did an analysis, the CBO did an analysis, and what they've determined is the following: that this money -- Barack Obama said this is a stimulus, a jolt to the economy -- the better part of this money is not going to be spent 'til 2010 --

WELCH: 2011.

HANNITY: -- 2011, 2012. So how is that a stimulus? We'll be out of the recession by then.

WELCH: Let's hope when they get into it, they're going to fix it, OK? This is round one, Sean. Don't get all upset about this one.

HANNITY: Well --

WELCH: This is round one.

HANNITY: If we were to break down the dollars -- the Heritage Foundation analysis of this: $6,700 of debt for every household in America; we could give $2,700 to every man, woman, and child if we wanted to just give them a check; and that for every job we create, if we go to the high side of their estimate, $217,000 we'd pay for a new job. That's unheard of.

WELCH: You know, we don't want this bill. We all agree on that.

—R.S.K.