"Saved or Created" -A Quick Look at the Numbers

It seems that American politicians have a case of the "illions." As long as a number ends in i-l-l-i-o-n, then they understand that the American public will generally treat them as equals.

In President Obama's state of the union address, he mentioned a plan to save 15 billion dollars per year, which was portrayed as quite significant.

Today, the Obama admisistration has proposed a budget with a $1.55 trillion deficit. $100 billion of which was for a "job creation program."

Thus the $15B is only 1% of the budget deficit and less than 1% of the annual budget.

There are only 300 million American citizens and the labor force is roughly half of that number including the unemployed, around 155 million. (sources are for journalists, so just trust that this is accurate along with everything else I say...)

Our unemployment figures show just over 10% unemployment nationally or around 16 million people. That does not take into account those who are "under-employed" or those who are struggling with their own business.

Pundits of the Democratic party have varying estimates of the number of jobs that have been "saved or created" by the stimulus package. However, most of the figures endorsed by the administration are in the neighborhood of 650,000. Any person with even a rudimentary understanding of economics can understand that some jobs will be "saved or created" by this enormous amount of spending. Still, the math and accountability on this seems suspect.

The advertised cost of the "Stimulus Package" that helped to "save or create" all of these jobs is $789 billion. That number does not take into account the interest expense on these dollars (since we are running a budget deficit) nor does it account for future spending increases if any of the temporary programs in the package are extended or made permanent. (sounds quite likely though...)

However, just using the administration's numbers, that equates to $1.2 million per job "saved or created." ($789,000,000,000.00/650,000)

Even if the average job "saved or created" is done so in perpetuity, and that job 'pays back' $12,000 per year in federal taxes, it will take 100 years to pay back the stimulus amount required to "save or create" that job in the first place. That, again, does not include any interest and assumes these jobs to be $75-80k per year in order to pay $12k in fed taxes. Only Jimmy Carter would see a 100 year loan with no interest as the right thing to do.

So, what is our point... 2 things:

1. These numbers with all the 'Zero's' have consequences. The budget shortfall of $1.55 trillion is about $10,000 per every working American. Add that to our existing 'net' national debt of $8.5 Trillion, and we have over $60,000 of debt for every working American. Unless the government plans to sell assets such as national parks, federal buildings, and technology, it will need to collect this money from the taxpayers in addition to keeping current with interest.

2. These so called "investments" in the American economy or workforce make absolutely no business sense and have only had a marginal impact in relation to unemployment rates. Can you imagine any business spending $1.2M for an annual cash flow of $12,000? The loan to GM was a better deal! This illustrates the need to have more individuals with practical business experience working in government as a Representative, Senator, or the CEO, himself.

I just wonder how many on "the hill" really understand the numbers themselves. I'm afraid I know just how few average citizens 'get it.'