ELECTION 2012 - Romney's 'New Math' on Jobs

"Mitt Romney’s ‘new math’ for jobs plan doesn’t add up" by Glenn Kessler, Washington Post 10/16/2012

“Let me tell you how I will create 12 million jobs when President Obama couldn't. First, my energy independence policy means more than 3 million new jobs, many of them in manufacturing. My tax reform plan to lower rates for the middle class and for small business creates 7 million more. And expanding trade, cracking down on China and improving job training takes us to over 12 million new jobs.”

— Mitt Romney, “in his own words,” in a campaign television ad

Romney’s 12-million-jobs promise has garnered a lot of attention. We became interested in this ad after a reader asked whether the campaign had provided much detail on how he would reach this total. This television ad is also prominently featured on the Romney campaign’s “Jobs Plan” Web page.

The math here appears pretty simple: 7 plus 3 plus 2 equals 12. But this is campaign math, which means it is mostly made of gossamer. Let’s take a look.

The Facts

As we have noted before, the 12 million figure is not a bad bet by Romney. Moody’s Analytics, in an August forecast, predicts 12 million jobs will be created by 2016, no matter who is president. And Macroeconomic Advisors in April also predicted a gain of 12.3 million jobs.

In any case, four of Romney’s top economic advisers — R. Glenn Hubbard (Dean of Columbia Business School), N. Gregory Mankiw (Harvard professor), John B. Taylor (Stanford professor) and Kevin A. Hassett (American Enterprise Institute scholar) — co-wrote a white paper that lays out the case that Romney’s spending, tax and regulatory policies would yield a more robust recovery — adding 250,000 jobs a month — that would result in 12 million jobs over four years. The analysis, which is prominently posted on the Romney campaign Web site, concludes:

“If we had a recovery that was just the average of past recoveries from deep recessions, like those of 1974-1975 or 1981-1982, the economy would be creating about 200,000 to 300,000 jobs per month. By changing course away from the policies of the current administration and ending economic uncertainty, as proposed by the Romney plan, we expect that the current recovery will align with the average gains of similar past recoveries. History shows that a recovery rooted in policies contained in the Romney plan will create about 12 million jobs in the first term of a Romney presidency.”

But the specifics — 7 million plus 3 million plus 2 million — mentioned by Romney in the ad are not in the white paper. So where did that come from?

We asked the Romney campaign, and the answer turns out to be: totally different studies … with completely different timelines.

For instance, the claim that 7 million jobs would be created from Romney’s tax plan is a 10-year number, derived from a study written by John W. Diamond, a professor at Rice University.

This study at least assesses the claimed effect of specific Romney policies. The rest of the numbers are even more squishy.

For instance, the 3-million-jobs claim for Romney’s energy policies appears largely based on a Citigroup Global Markets study that did not even evaluate Romney’s policies. Instead, the report predicted 2.7 million to 3.6 million jobs would be created over the next eight years, largely because of trends and policies already adopted — including tougher fuel efficiency standards that Romney has criticized and suggested he would reverse.

The 2-million-jobs claim from cracking down on China is also very suspicious.

This figure comes from a 2011 International Trade Commission report, which estimated that there could be a gain of 2.1 million jobs if China stopped infringing on U.S. intellectual property rights. The estimate is highly conditional and pegged to the job market in 2011, when there was high unemployment. “It is unclear when China might implement the improvement in IPR protection envisioned in the analysis, and equally unclear whether the United States will face as much excess labor supply then as it does today,” the report says.

The Romney campaign has already used this study, in a misleading way, to claim that Obama’s China “policies cost us 2 million jobs.” Now the campaign has just taken the same figure and credited the claimed job gain to itself, even though the report does not examine any of Romney’s proposed policies.

“The big point is the 3+7+2 does not make up the 12 million jobs in the first four years (different source of growth and different time period),” Hubbard acknowledged in an e-mail.

The Pinocchio Test

This is a case of bait-and-switch. Romney, in his convention speech, spoke of his plan to create “12 million new jobs,” which the campaign’s white paper describes as a four-year goal.

But the candidate’s personal accounting for this figure in this campaign ad is based on different figures and long-range timelines stretching as long as a decade — which in two cases are based on studies that did not even evaluate Romney’s economic plan. The numbers may still add up to 12 million, but they aren’t the same thing — not by a long shot.

In many ways, this episode offers readers a peek behind a campaign wizard’s curtain — and a warning that job-creation claims by any campaign should not be accepted at face value. The white paper at least has the credibility of four well-known economists behind it, but the “new math” of this campaign ad does not add up.

As readers know, we tend to judge more harshly claims in prepared speeches or ads that were the result of considered discussion by political aides.

Clearly, some clever campaign staffer thought it would be nice to match up poll-tested themes such as “energy independence,” “tax reform” and “cracking down on China” with actual job numbers. We just find it puzzling that Romney agreed to personally utter these words without asking more questions about the math behind them.