As part of his scheme to cater to business interests, President Obama yesterday appointed Intel CEO Paul Otellini to the President's Council on Jobs and Competiveness. The appointment of a corporate leader to such an advisory panel isn't particularly surprising, given that Obama has been bending over backward to make sure the opinions of Big Business^TM are heard in the White House (you know, because they're soooo underrepresented). What is surprising is that Otellini has a blind spot for honest appraisals of economic policy.

NationalJournal.com's Aamer Madhani:

Perhaps most interesting about Otellini is that he's offered some pretty blunt criticism of Obama's economic strategy — particularly the stimulus package that the White House says helped keep the recent recession from becoming another Great Depression. But Otellini and many Republicans counter that the stimulus was wasteful spending that did not achieve its goal.

"The decisions so far have not resulted in either job growth or increased confidence," Otellini said of the stimulus package in a September interview with CNN Money. "When what you're doing isn't working, you rethink it, and I think we need to rethink some plans." (emphasis mine)

The only people who make this claim are anti-government ideologues who'd rather pour lemon juice on self-inflicted paper cuts than admit that, yes, sometimes government intervention in the economy is necessary and beneficial. That Obama is seeking economic advice from someone so impervious to serious economic analysis is troubling. This is no way to win the future.

But let's take this opportunity to go back to the tape to see evidence that the Recovery Act created millions of jobs and show that Otellini doesn't quite have a handle on reality:

Council of Economic Advisors: The Economic Impact of the American Recovery and Reinvestment Act of 2009 Fifth Quarterly Report

The CEA estimates that as of the third quarter of 2010, the ARRA has raised employment relative to what it otherwise would have been by between 2.7 and 3.7 million, consistent with the initial estimate that the ARRA would save or create 3.5 million jobs as of 2010:Q4.

Congressional Budget Office: Estimated Impact of the American Recovery and Reinvestment Act on Employment and Economic Output From July 2010 Through September 2010

[the Recovery Act] Lowered the unemployment rate by between 0.8 percentage points and 2.0 percentage points, [i]ncreased the number of people employed by between 1.4 million and 3.6 million, and [i]ncreased the number of full-time-equivalent (FTE) jobs by 2.0 million to 5.2 million compared with what would have occurred otherwise.

Don't believe government-sourced information?

Wall Street Journal: Economists Credit Fed For Alleviating Crisis

On average, [of 54 economists surveyed] estimated that the stimulus added one percentage point to growth in 2009; they forecast gross domestic product would expand 3% this year, compared with 2.2% in the absence of stimulus. They estimated that the February unemployment rate, reported at 9.7% last week, would have been 10.4% without the stimulus.

ABC News: Stimulus Gets B-Minus Grade

"The stimulus worked," said Stuart Hoffman, chief economist at PNC Bank. Without it, "the unemployment rate would probably be closer to 11 percent" and the economy might not have grown at all last year."

Image by Flickr user justmakeit used under a Creative Commons license.

OMB Watch is back from the holiday break! I'm personally happy about that, because I have the sense that the new Congress, like the old Congress, is going to provide us lots and lots of good blogging material. Today, I get to put up tortured claims from incoming House Oversight Committee Chair Darrell Issa (R-CA) that teachers and police officers don't have real jobs and that if your private-sector job was ever cut, it never actually really existed as a real job.

Now, you can say those are jobs created or saved. Really, they're simply dollars spent for one year of kicking the can down the road. It didn't create -- there's not a lot of ripple effect in that kind of spending.

Real creation of jobs, permanent jobs is what we didn't get out of this. Of course, you get your money spent. If I hire you and give you a quarter million dollars or $174,000, you have a job for that year. That's not creating a job. That's hiring or continuing to pay for a government worker.

Creating a job is about something you do that becomes permanent. Stimulus should have been about private-sector creation.

Issa tries to argue that 1) government workers, like teachers, aren't actually employed in real jobs; 2) only permanent jobs are real jobs; 3) the Recovery Act did create real, permanent jobs in the private sector; 4) but the Recovery Act didn't create net growth because it wasn't spent "right."

Issa backpedals from his initial claim that the Recovery Act didn't create jobs, because, well, that's a completely incorrect statement. If you think the Obama administration's information is slanted, you can bypass the multiple Council of Economic Advisors reports that indicate the Recovery Act created millions of jobs, and go straight to private economists. They say that it "boosted growth and mitigated job losses" and that "the unemployment rate would probably be closer to 11 percent [without the Recovery Act]."

So, when Issa says the Recovery Act was a "trillion-dollar stimulus that did not create jobs," he actually means it was a trillion-dollar stimulus that did create jobs.

"What if a president cut Americans' income taxes by $116 billion and nobody noticed?" That's the lede on a recent New York Times article, one talking about a tax cut called Making Work Pay (MWP). President Obama's staff was instrumental in crafting and passing the MWP, which was part of the Recovery Act. The tax cut is stealthy, in that its design spreads the benefits out in small amounts, in each paycheck, as opposed to a single, larger payout at tax time. It was so stealthy that, as the Times article notes, few people know that Obama signed into law a tax cut affecting 95 percent of taxpayers. In fact, the MWP was so stealthy the Times barely mentioned it until this week. So why is the Times surprised no one knows about the tax cut?

The MWP was supposed to be the cutting edge of tax policy. Here's how the Times put it:

Faced with evidence that people were more likely to save than spend the tax rebate checks they received during the Bush administration, the Obama administration decided to take a different tack: it arranged for less tax money to be withheld from people's paychecks.

They reasoned that people would be more likely to spend a small, recurring extra bit of money that they might not even notice, and that the quicker the money was spent, the faster it would cycle through the economy.

The actual MWP tax cut came in the form of a credit, which is the second half of the strategy. The tax credit is there to balance out the higher taxes people would have at the end of the year thanks to this withholdings trick (less withholdings = larger incomes = higher taxes, higher taxes - tax credit = lower taxes). This way, people have more money throughout the year, instead of one big check they toss into a bank account and forget about. Think of it as an effort to make the stimulus' tax package as stimulative as possible.

While we're still arguing about just how stimulative the MWP credit actually was, it's hard to argue that few people know about it. Again, the Times:

In a New York Times/CBS News Poll last month, fewer than one in 10 respondents knew that the Obama administration had lowered taxes for most Americans. Half of those polled said they thought that their taxes had stayed the same, a third thought that their taxes had gone up, and about a tenth said they did not know. As Thom Tillis, a Republican state representative, put it as the dinner wound down here, "This was the tax cut that fell in the woods - nobody heard it."

Clearly, the MWP has a PR problem. The Times article doesn't come out and say it, but it's safe to say that a lot of the people they polled were flat out wrong. If 95% of taxpayers received the credit, a lot of people probably had lower taxes. It's not that all these people were lying; they just didn't realize or remember that they in fact received a quite large tax cut in 2009.

If you think about it, the public's ignorance about the MWP credit is pretty sad. The 2009 tax form had a new section, Schedule M, created specifically for the new Obama tax cut, which had the words "Making Work Pay" all over it. To finish your taxes, you had to fill out Schedule M. So if you received a paycheck in 2009, you came into contact with the MWP credit. And yet, no one knows about it. Even worse, people think that Obama did the opposite, and raised their taxes.

So why do people believe the opposite of the truth? Surely the nation's news organizations were giving the tax cut a fair amount of coverage, considering it affected so many people. A quick look at the Times' archives, however, shows that the MWP tax cut received almost no coverage. Since the Recovery Act's passage, the paper has written about the MWP credit only three times. And most of those articles talked about how the new Schedule M was giving taxpayers difficulties when it came to filling out their taxes. Both the MWP tax cut and the Bush tax cuts are expiring at the end of this year, and yet a search for the phrase "Bush tax cuts" on the Times' website returns thousands of hits, but searching for "Obama tax cuts" gives you only one result, and it's this article. The Times even mentioned the estate tax, which a recent report said affected only .6% of deaths in 2008, in 77 articles this past year.  That's a pretty bad disparity in coverage.

And it's not as if the White House wasn't talking about the MWP. A search of the White House website brings up fourteen press briefings in which the MWP was specifically mentioned, eight presidential speeches, twenty-two press releases, nineteen blog posts (including a vociferous defense of the MWP credit), twelve Council of Economic Advisers reports, and at least a couple videos. That's more times than the New York Times, the Washington Post, the Los Angeles Times, Fox News, and MSNBC mentioned it, combined.

In other words, if national news organizations aren't covering Obama's signature tax cut, one which affected almost everyone in the country, it shouldn't be too surprising that no one knows about it. The Times article shouldn't be surprising because it found people who are uninformed. It should be surprising that it took the paper this long to start informing the public on important issues.

Images by Flickr users Joe Shlabotnik and Barack Obama used under a Creative Commons license.

If one were to listen to most conservative politicians and pundits these days, you'd come away with the impression that the Recovery Act has failed. It hasn't created any jobs and it hasn't helped the economy, so the narrative goes. For instance, here are a few quotes from the past couple weeks:

"All this 'stimulus' spending has gotten us nowhere." -House Minority Leader John Boehner (R-OH)

"[The stimulus] is simply not working." -Greta Van Susteren

"Everyone understands it was a payoff, not a jobs-creator." -Charles Krauthammer

"More people believe that Elvis Presley is alive than the stimulus created jobs." -Rep. Kevin McCarthy (R-CA)

"[The Recovery Act] increased the number of full-time-equivalent jobs by 2.0 million to 4.8 million compared with what would have occurred otherwise." -Congressional Budget Office

Whoops, sorry, that last one was actually a quote from the CBO's new report on the Act's effects on the economy. The independent, non-partisan institution reported that, contrary to what many seem to think, the Recovery Act raised real GDP by between 1.7 and 4.5 percent, lowered unemployment by between .7 and 1.8 percentage points, and increased the number of people employed by between 1.4 million and 3.3 million. And that was just looking at what happened between April and June 2010.

In other words, the Recovery Act hasn't failed; on the contrary, it's had an immense effect on the nation's economy. The fact that we're still plagued by high unemployment and a faltering economy indicates that the Act wasn't nearly big enough, not that it hasn't worked.

Oh, and for those keeping score at home, the CBO report also revised downwards the cost of the Recovery Act. The total price tag will be about $814 billion, down from the CBO's earlier estimate of $867 billion.

Image by Flickr user calamity1 used under a Creative Commons license.