Lots of talk today of another economic stimulus package, perhaps during the post-election lameduck session of Congress.
- CNNMoney.com: “Bernanke: It’s time for stimulus plan“
- Bloomberg: “Bush Is `Open to Idea’ of Second Economic Stimulus (Update1)“
- Office of the House Majority Leader: “Hoyer Statement on Chairman Bernanke, White House Comments Regarding Economic Recovery Package“
No opinion here although we wonder: At what point does deficit spending stop being a “stimulus” and instead turns into “printing paper money like Weimar Germany?” In order to stimulate wheelbarrow production….
Today’s discussion also induces us to link to a post over at the Department of Transportation’s official blog, “Fastlane,” specifically the September 16 commentary by Chief Economist Jack Wells, “Transportation Spending, An Inefficient Way to Create Short-Term Jobs“:
Whenever the economy hits a rough spot, politicians often say that we need to spend more on transportation infrastructure to create jobs. They often cite numbers like “47,500 jobs are created for every billion dollars spent on infrastructure.” The Federal Highway Administration has indeed done estimates of the number of jobs that are supported by spending on highway infrastructure, and the “47,500 jobs” number comes from one such study done in 1997. But a billion dollars doesn’t buy as much as it used to, in highways as in most things, and, because that billion dollars buys less steel, concrete, and employment-hours, recent updates of those studies have cut the number of jobs supported by a billion dollars in federal highway spending to about 34,800 jobs.
Moreover, that number is based on a federal investment of $1 billion, assuming that it is matched by $250 million in state spending. If we calculated the number of jobs supported from $1 billion in total federal and state spending, the jobs created would fall to about 27,800. Also, it’s really more correct to say that the billion dollars “supports” 27,800 jobs, because the actual number of new jobs created depends on how much unemployment there is when the highway spending starts.
The NAM strongly supports long-term investment in infrastructure, but we ought to be realistic about the purposes: Should the dollar be invested in jobs or in infrastructure? The two aren’t necessarily interchangeable.
Heck, if you want to maximize jobs, let’s start by waiving Davis-Bacon requirements, letting the money go a lot further.
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