When President Biden and his Democratic allies passed their $1.9+ trillion “American Rescue Plan” in March 2021, they promised it would create millions of jobs. Roughly nine months later, we now have fewer jobs than if we didn’t pass the “stimulus” legislation at all.
At least, that’s the conclusion reached by a new analysis from the right-leaning American Enterprise Institute (AEI). Senior Fellow Matt Weidinger ran the numbers and checked in to see how the Biden administration’s promises have aged. The White House projected that with their massive spending legislation, the economy would add 10.25 million jobs in 2021. The nonpartisan Congressional Budget Office projected that without the plan, the economy would create 6.25 million jobs—a number Biden called “dismal.”
Per AEI, the economy only created 6.1 million jobs in 2021… even less than was projected without the stimulus spending. So, not only did the 4 million jobs promised by President Biden, Nancy Pelosi, and his many progressive allies fail to materialize. The Democrats spent $1.9 trillion in taxpayer money—roughly $13,250 per federal taxpayer—and ended up with even fewer jobs overall than was expected if we spent nothing.
Yes, you read that right.
How could “stimulus” legislation lead to worse economic outcomes? It’s actually pretty simple. For one thing, the $1.9 trillion bill was full of unrelated spending and partisan agenda items.
But more crucially, the federal government cannot create resources out of thin air. In order to invest resources in “stimulus” it must, directly or indirectly, take those resources from somewhere else in the economy. There’s no guarantee the government will better allocate them than the American people would have. So, it’s not like stimulus spending grows the economy if it’s just somewhat helpful to some people. The government’s investments must be more economically valuable overall than the products of whatever private investment would have occurred in its absence—a rarity, since politicians hand out money based on politics, not market signals.
Now, of course, the White House is trying to spin the economic recovery as strong and crediting their stimulus. Biden claimed in a recent speech that “We’re entering 2022 in a position of a unique economic strength… six million new jobs, a record number for a new president, have been created since January last.”
But back in March 2021, the White House dubbed the same levels of job growth “dismal” and used it as a disaster scenario that we must pass the American Rescue Plan to avoid. You can decide for yourself which time they were telling the truth.