It depends on how you look at it. If you have been listening to President Obama’s continuous assertions that the stimulus package did create jobs, here’s some good news for you. According to the CBO, the stimulus may have added 3.3 million jobs. In its most recent quarterly appraisal of the stimulus act, the CBO said the stimulus lowered the unemployment rate by between 0.7 and 1.8 percentage points during the quarter ending in June, decreasing the number of unemployed by between 1.4 million and 3.3 million. 3.3 million is pretty close to Obama’s promise to create 3.5 million jobs by the end of the year. If the CBO’s figures are accurate, Obama should be touted for the steadfast defense of his stimulus package.

Unfortunately, like every mass released bit of news, you have to take it with a grain of salt. Let’s take a deeper look into the CBO’s estimates and the basis for their conclusions.

The best place to start is right at the CBO itself. On March 8, 2010 CBO Director Douglas Elmendorf spoke at a conference to the National Association for Business Economics (NABE) regarding, among other things, the impact of the stimulus law on the economy. During the session, Elmendorf stated specifically that his team’s estimates do not measure real-world outputs (just inputs), that they do not serve as an independent check on its success or failure, and that if the stimulus had not created jobs the CBO’s figures would not reflect that fact.

See, the CBO doesn’t actually count jobs created. Instead, it uses models that assume putting taxpayer money into the system results in additional demand, additional spending, and, ergo, additional jobs. Even before the stimulus passed, the CBO used these same models to predict that the stimulus would create jobs. And now it’s using those same models to estimate that it has created jobs. Ever heard of circular reasoning? 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.

But, hey, it’s not like CBO doesn’t come right out and tell us their methods are essentially worthless. In the aforementioned conference Elmendorf described his office’s frequent, legally-required stimulus reports as “repeating the same exercises we [already] did rather than an independent check on it.” CBO tweaks its models on the input side, he says, for example adjusting for increases in government spending. But the results the CBO reports—like the job creation figures—are simply a function of the inputs it records, not real-world outputs.

So if we cannot rely on CBO figures, how do we determine what the stimulus did and if it helped at all? We could rely on subjective evidence provided by a NABE survey, which asked economists if they thought the stimulus created jobs, to which the vast majority answered “No.”, but that’s not good enough. What we’re looking for at this point is hard evidence.

You don’t have to look far.

The seasonally-adjusted SGS Alternate Unemployment Rate reflects current unemployment reporting methodology adjusted for SGS-estimated long-term discouraged workers, who were defined out of official existence in 1994. That estimate is added to the BLS estimate of U-6 unemployment, which includes short-term discouraged workers.

The U-3 unemployment rate is the monthly headline number. The U-6 unemployment rate is the Bureau of Labor Statistics’ (BLS) broadest unemployment measure, including short-term discouraged and other marginally-attached workers as well as those forced to work part-time because they cannot find full-time employment.

This is exactly why you must always question official data. It is constantly manipulated to cast politicians and the government in general in a better light. Unemployment statistics are just one area where this takes places. Don’t even get me started on GDP.

The point of this article is not to complain, but to inform. Why? So that we can start enacting policies that actually work and restore American jobs to American workers. Right now, when we spend stimulus money it goes right to China. In today’s globalized economy, stimulus enacted within a country does not stay in that country. Companies can take any public funding and use it to expand in other countries, like China, elevating their bottom line but doing nothing in terms of providing for American growth.

These negative effects will never be shown in official figures. Americans must look beyond the official story and seek solutions that restore manufacturing and productivity to America. Without production and domestic investment, any “wealth” we generate in America will be based on foreign debt and sent right back to other countries. Why does our government keep touting policies that lead to America’s demise just to make themselves look good in the short-term? Do we really still fall for these same underhanded tactics?

The funds our government spend need to be directed at developing workers’ skills, improving an outdated and ineffective education system, and helping those financially-strained by the recession get back on their feet as productive individuals. Coupling this spending with better tax and trade polices is the only way to fix America’s economy. It’s time to end trickle-down economic theory; it has no place in a globalized world.

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