The stimulus myth

The federal government's report this week on how many jobs were saved or created so far by stimulus money awarded through federal agencies means little. It involves the expenditure of only $2.2 billion of the $16 billion given for that purpose, and that is but a small slice of the $787 billion total approved in the bill. A broader report will be released at the end of this month.

But even that isn't likely to produce anything to give Americans a true understanding of what their money has purchased. Instead, it will be spun and distorted in the political fun house of mirrors.

The truth is, the federal stimulus will in fact save and produce jobs. The 536 jobs this report said were brought to Utah are real. Many of these projects involve public works and other things that were sorely needed.

But the truth also is that the stimulus money is not being conjured out of thin air. It has a price, and that price is likely to cost some degree of prosperity. Politicians always speak of the "multiplier effect" that comes from a stimulus. When federal money is used for hiring workers, those workers in turn use their salaries to buy goods and services, causing a ripple of goods through a community. What politicians don't tell you about is the opposite effect, which also is present whenever government stimulates the economy. That is, every dollar government taxes from people is one dollar less for them to spend on goods and services, which ripples in the form of sales that never occur. Even worse, every dollar borrowed from China or elsewhere is a dollar, plus interest, taken from the economy.

A government stimulus can jump-start certain sectors of the economy or instill a sense of much-needed confidence among consumers. But you can't pull money out of an economy in order to put it back into an economy and expect a lot of permanent benefit. Eventually, the overall effect will be negligible, or worse. And some day, all that debt must be repaid.

The current 9.8 percent national unemployment rate suggests the nation remains far from recovery. The administration will certainly argue that unemployment would be far worse without the stimulus, but that is as impossible to prove as any other claim that comes from a politician.