Friday, November 6, 2009

Robbing Peter to pay Paul

Brian Riedl:
Those dissecting the White House claim that the $200 billion spent on the stimulus has created or saved 650,000 jobs have focused on the arithmetical errors in counting the hirings. They are ignoring a much more fundamental issue. Before Congress could inject $200 billion into the economy, they had to borrow $200 billion out of the economy. So the more central question is thus: If injecting $200 billion into the economy supported 650,000 jobs, then how many jobs were lost by first borrowing that $200 billion out of the economy?

The White House says zero. Their job numbers assume all $200 billion is “new” and supports jobs that would not otherwise exist.

This is absolutely implausible. How can adding $200 billion to one part of the economy support 650,000 jobs, but removing $200 billion from another part of the economy not cost a single job anywhere?

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