Non-Newsworthy CBO Recovery Act Report is Big News

[1]In a non-exciting turn of events, a routine report [2] from the Congressional Budget Office, Congress's non-partisan budget analysis arm, has set off another round of fighting over Recovery Act job creation. The report studies the economic effects of the Recovery Act, and estimates that the Act has created or saved somewhere between 600,000 to 1.6 million jobs,* while growing the GDP by 1.2 to 3.2 percent. Democrats immediately latched onto the report, saying it showed that the Recovery Act is working, and Republicans said that the wide range of the estimate demonstrates that no one is really sure what affect the Act is having on the country. It even spawned multiple [3] responses [4] from the White House, including a statement [5] from the Veep.

The report would be big news, as everyone seems to think it is, if it were not for the fact that multiple sources have already come out with very similar estimates. Two months ago, the Council of Economic Advisors published a report [6] giving a job estimate range of 600,000 to 1.1 million, and estimated that the Act's effect on the GDP would be between 2.7 and 3.6 percent. Moreover, the CEA report showed that most observers, including earlier CBO estimates, had essentially made the same estimates.

The only difference is that the new CBO report is using data from the end of the fiscal year, whereas the earlier reports used slightly older data. But, as another recent CBO report [7] noted, actual Recovery Act spending is remarkably close (within 1%) to estimated Recovery Act spending, meaning that there really isn't any difference in the old and new data.

So, essentially, a report from the CBO, which simply confirms what everyone else, including itself, has already been saying for months, is big news. Although, in reality, I think the most newsworthy aspect of this report is that it shows how important CBO reports are to the political arena. Apparently something isn't true until the CBO says it is.

*In case you're wondering why this number is vastly higher than the number cited on Recovery.gov [8], the CBO report looks at the number of jobs created by all aspects of the Recovery Act, including tax cuts and direct payments to individuals, which are not covered under the Recovery.gov [8] jobs estimate.