Richard Posner displays his failure to understand the difference between expenditures (reported on Recovery.com) and tax rebates (not reported online, but have to be estimated).
Romer’s speech argues that the disbursements of stimulus funds through the end of the second quarter of this year (that is, through June 30) have had a big effect on economic output and employment. I said this was unlikely as a matter of theory, and that she had no persuasive evidence to back up her claim. And I raised the question of the ethical responsibilities of an academic who takes a government job and then makes a speech that although it deals with a subject that she had studied and written about as an academic is not a responsible academic analysis. My concern is enhanced by the statement of one of my critics that the Council of Economic Advisers, of which Romer is the chairman, has a sterling reputation for political neutrality and analytical rigor. Romer’s speech does not bode well for the preservation of that reputation. Another critic argues that since it was just a speech, intended therefore to be heard rather than read, Romer should be permitted to have rounded off her numbers, and thus to have rounded off $89 billion (this critic’s estimate of how much stimulus money had been disbursed by the end of the second quarter) to “more than $100 billion” (her language). This overlooks the fact that the speech was posted on the CEA’s website, and is replete with footnotes, which I doubt she read aloud.
In fact, while I am on the subject of the amount of stimulus money disbursed so far, $89 billion seems too high. The government’s official figure is $60 billion, and a recent estimate by msnbc.com is $58 billion. One of my fiercest critics estimates the figure at “about $60 billion,” without however remarking the discrepancy between “about 60 billion” and Romer’s “more than $100 billion. [emphasis added – mdc]
“One of my fiercest critics” apparently is me. Since Mr. Posner clearly did not follow the link provided in my previous post, let me quote from Donald Marron, who was CBO Acting Director, and a member of the CEA under George W. Bush (hence, I suspect, not a “left-wing” economist, as Mr. Posner has characterized me):
In her recent speech about the impact of the stimulus effort, Christina Romer, Chair of the President’s Council of Economic Advisers, noted that “as of the end of June, more than $100 billion had been spent.”
If you visit the government web site tracking the stimulus (Recovery.gov), however, it will tell you that the government had paid out only about $60 billion by July 3. (You can find this figure in the chart at the lower right hand corner of the home page.)
Why does Christi report a figure so much larger than the one reported on the official website? Because Recovery.gov isn’t tracking all of the budget effects of the stimulus.
Christi’s figure includes the $60 billion of spending reported on Recovery.gov plus an internal estimate, prepared by Treasury, of the tax reductions resulting from the stimulus effort through June 24. Those tax reductions are obviously a big deal, totaling $40 billion or slightly more through the end of June.
I used $60 billion, and IMF estimate, in my August 1st post, for want of a better guess. The $89 billion is yet again another estimate, from Mark Zandi (all of which I stated explicitly in my post). But from personal experience, I know two things: (1) the CEA has access to more information than those of us in the public have access to; and (2) the CEA would not publish and allow into a White House document (be it a speech or white paper or ERP) unverifiable numbers.
I think a whole bunch of former CEA economists, who have served in both Republican and Democratic administrations, will back me up on this specific point. Hence, on this issue, Mr. Posner simply does not know what he is talking about; I suggest he talk to somebody who has worked in the CEA.
So, to recap: $60 billion paid out on the spending side. $40 billion in tax rebates. No mystery, if one understands the numbers.