Stimulus job creation claims uncertain

WASHINGTON — President Barack Obama and congressional Democrats say it nearly every day: Their huge economic stimulus package must be rushed to passage because it will create or save 3 million to 4 million jobs.

In fact, those figures are uncertain enough that even some economists who produced them are basically saying: We gave it our best shot.

"The models are based on historic experience," said Mark Zandi, referring to formulas he and other economists use to predict economic behavior. "And we're outside anything we've experienced historically. We're completely in a world we don't understand and know."

Zandi is chief economist at Moody's Economy.com of West Chester, Pa. His projection last week that the House-passed stimulus measure would create 3 million jobs by the end of 2010 — scaled down from a 4 million estimate he made days earlier — have been cited repeatedly by Democrats as justification for the $819 billion legislation.

"Yes, there's a high level of uncertainty," said Zandi, a Democrat who advised Republican presidential candidate John McCain last year. "But my estimates are as good as you're going to get, and they're good enough to be useful in trying to evaluate whether we should do this or not."

Democrats also frequently cite an early January estimate by two economists working for Obama. Christina Romer and Jared Bernstein, now top White House economic advisers, said a plan roughly similar to the House-passed version would yield 3.3 million to 4.1 million jobs by late 2010 that wouldn't otherwise exist — but added a catch.

"There is considerable uncertainty in our estimates," their report said, warning that the package's impact on the economy and job creation "are hard to estimate precisely."

Separately, the nonpartisan Congressional Budget Office — lawmakers' official fiscal analyst — estimates that by the end of 2010, the House bill would mean 1.2 million to 3.6 million additional jobs.

The economists' caution highlights the difficulty of gauging how the stimulus would affect an ailing but still huge $14 trillion economy that is shedding 500,000 jobs a month.

There's little doubt the measure — which could grow to $900 billion when the Senate completes its version soon — would help ease unemployment from its sheer size alone. The question is: By how much?

To answer that, economists generally use a two-step process.