CLAIM: President Biden has frequently claimed over recent weeks while promoting the passage of his $1.9 trillion COVID relief package, dubbed “The American Rescue Plan” that based on an economist analysts from Moody’s Analytic estimates, his plan would “create 7 million new jobs” if his package becomes law.
“And it will generate economic growth for the entire nation. That’s why major economists — left, right, and center support this plan. Even Wall Street has agreed. According to Moody’s, by the end of this year, this law will spur our economy to create 7 million new jobs,” Biden said in remarks on the implementation of his COVID relief plan at the White House Monday.
Fact Check → FALSE
Here are the other numerous times that Biden used this exact quote citing the report issued by Moody on the economic impact of his $1.9 trillion American Rescue Plan COVID relief package.
“Every single major economist out there — left, right, and center — supported this plan. Even Wall Street agreed. According to Moody’s, for example, by the end of this year, this law alone will create 7 million new jobs. Seven million.”
“The bottom line is: The American Rescue Plan meets the moment. An analysis by Moody’s estimates that it will help the economy create 7 million more jobs this year alone. And it would be on the way to another 18 million jobs, Moody’s estimates, would be created over the next four years with our Build Back Better recovery plan.”
February 22 → Remarks by President Biden on Helping Small Businesses
“In fact, an analysis by Wall Street’s firm, Moody’s, estimates that if we pass my American Rescue Plan, the economy will create 7 million jobs this year. This year.”
February 19 → Remarks by President Biden at Pfizer Manufacturing Site
“In fact, an analysis by the Wall Street firm Moody’s estimates that if we pass my American Rescue Plan, the economy will create 7 million jobs this year. This year.”
“Wall Street investment firm, Moody’s, says if we pass the American Rescue Plan, it will lead to 4 million more jobs than otherwise would be created.”
Biden has exaggerated in remarks that those “7 million new jobs” would be created based on analysis from Moody’s Analytics of his plan. Titled “The Biden Fiscal Rescue Package: Light on the Horizon,” the Jan. 15 report on the American Rescue Plan never proclaimed that due to Biden’s COVID package, it would strictly be responsible for the impact of the creation of new jobs. The report cites gross domestic product (GDP) would grow to 8% for 2021 and 4% in 2022, a growth that would be expected without any additional fiscal support.
“This is almost double the growth that would be expected without any additional fiscal support. At this pace of growth, the economy would create 7.5 million jobs in 2021 (December to December) and 2.5 million in 2022 to fully recover the jobs lost since the pre-pandemic peak. By then, the economy will have returned to full employment—an unemployment rate of 4% to 4.5% and a labor force participation rate of more than 62.5%,” the analysis report wrote.
However, Moody’s projected figure does not refer to jobs created based as a result of the American Rescue Plan — it emphasized jobs that economists are forecasting would be created even without the enactment of the hefty stimulus bill.
Recent projections by the nonpartisan Congressional Budget Office (CBO) provided the “baseline without additional fiscal stimulus” for job creation ahead. In a report issued on February 1, CBO projected 6.25 million net new jobs would be created between the fourth quarter of 2020 and the fourth quarter of 2021, or an average of 521,000 per month — again, without Biden stimulus plan. CBO also projected last month that even without the American Rescue Plan passage, employment would still rise by more than 6 million jobs in 2021 and 1.7 million in 2022.
According to the last Democrat-led stimulus in January 2009, the incoming Obama-Biden administration often touted a detailed report drafted by the Obama administration’s chief economists. The “Romer-Bernstein Report” would confidently provide specific projections to help pave the path of what would become the February 2009 ARRA stimulus law, by claiming it would quickly create nearly 3.7 million news jobs and hold the unemployment rate under eight percent. However, neither projections did occur, as it saw employment fell drastically after the passage with the unemployment rate spiking 9 months later to 10 percent in October 2019.
Moody’s report also noted that Biden’s American Rescue Plan is “mostly about supporting the demand side of the economy, but it incorporates a handful of policies aimed at increasing the supply of labor… to facilitate the return to the workforce of several million people, mostly women, who have left the workforce during the pandemic.”
Moody’s Analytics chief economist Mark Zandi, who co-authored the analysis of Biden’s proposal, stated that the projected job gains for 2021 are likely to occur even if the $1.9 trillion COVID plan doesn’t become law.
“If there is no additional fiscal support, the economy will create 3.5 million jobs during this period December 2020 and December 2021,” Zandi said.
It’s also worth noting that Moody previously made this same exact analysis before the 2020 election, with this report giving Biden as a candidate a boost in his election in the final weeks. The Moody’s Analytics dated September 2020 forecasted Biden’s economic agenda would lead to 7 million more jobs created compared to President Trump. The study predicted today’s scenarios of Democrats controlling both chambers of Congress and the White House would lead to a significant increase in federal spending, largely “deficit-financed,” meaning the government racks up a bigger federal debt.
However, despite inheriting an economy with strong growth momentum, the risk from Biden’s relief plan and future economic policies while portraying the economy as a disaster that requires trillions of dollars in new spending would have a long-term corrosive impact. A Hoover Study estimates that the Biden’s agenda would reduce full-time employment per person by about 3%, the capital stock per person by some 15%, and real GDP per capita by more than 8%. Compared to Congressional Budget Office estimates for these variables in 2030, this means there would be 4.9 million fewer working Americans, $2.6 trillion less in GDP, and $6,500 less in median household income.