It turns out that it is indeed a GIGO calculation, just like the last time
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Oh Look, Another CBO Report on the Effects of the Stimulus!
Peter Suderman | August 25, 2010
Once again, the Congressional Budget Office reruns the same models that it used to estimate that the stimulus would create jobs and finds that, to the surprise of no one, that the model still says that the stimulus creates jobs. Hooray for the stimulus! Nevermind that the CBO’s director has confirmed that these reports do not serve as independent checks on the real-world effects of the spending, it’s news!
reason.com
But if the stimulus had failed to create jobs, would the CBO's reports have picked up on this? Probably not.
See, the CBO doesn't actually count jobs created. Instead, it uses models that assume that putting taxpayer money into the system results in additional demand, additional spending, and, consequently, additional jobs. Before the stimulus passed, it used these models to predict that the stimulus would create jobs. And now, in analyzing its effects, it's using those same models to estimate that it has created jobs. But because the CBO relies on slightly updated versions of the same, original models throughout the process, it wouldn't necessarily detect the fact that the stimulus didn't work if that were the case.
Stimulus-boosters have basically ignored this. But the CBO, to its credit, has been fairly forthcoming about its methods and their limitations. In response to a question at a speech earlier this month, CBO director Doug Elmendorf laid out the CBO's methodology pretty clearly, describing the his office's frequent, legally-required stimulus reports as "repeating the same exercises we [aleady] did rather than an independent check on it." CBO tweaks its models on the input side, he says—adjusting, for example, how much money the government has spent. But the results the CBO reports—like the job creation figures—are simply a function of the inputs it records, not real-world counts.
Following up, the questioner asks for clarification: "If the stimulus bill did not do what it was originally forecast to do, then that would not have been detected by the subsequent analysis, right?" Elmendorf's response? "That's right. That's right."
reason.com
3.26.10 @ 4:30PM|#
This is something else. They essentially run the models and assume reality fits them. If the model says that it created X number of jobs than it did. It is right out of Brazil or Catch 22. I won't say 1984 because it is more comical than dark.
reason.com
No criticism of the CBO is implied; they do what they are legally required to do. But given that this has now happened several times, I'm disappointed that we're still seeing commentators treat these reports as if they involved new research.
theatlantic.com
Joshua 2 hours ago in reply to james1967x
The point is that we don't know how much the stimulus stimulated & all we have are these much removed from reality equations that keep getting used over and over to prove themselves. These reports include NO observations from reality.
theatlantic.com |
