Conservatives Distort Research To Claim They’ll Create 6.2 Million Jobs
Conservatives Distort Research To Claim They’ll Create 6.2 Million Jobs
Our guest blogger is James Kvaal, Senior Fellow at the Center for American Progress Action Fund.
House Republicans claimed yesterday that their alternative economic recovery plan –- a Bush-like package of tax cuts — would create 6.2 million jobs. As Rep. John Boehner (R-OH) said during a press conference:
We have an analysis by the president’s senior economic adviser who also shows that tax cuts actually provide more immediate relief and more jobs than spending, so you get more — a bigger bang for the buck. Well, using the methods and economic models developed by the president’s top adviser — and when those are applied to our Republican plan, it shows the Republican plan could create as many as 6.2 million jobs over the next two years.
House Republicans proceeded to all vote against President Barack Obama’s American Recovery and Reinvestment Act. But in claiming support from Obama economic advisor Christina Romer, they misapplied her past work and ignored her more recent and relevant work.
The Republican statement cites a 2007 paper by Romer on the economic benefits of tax cuts. But as noted across the blogosphere, Romer’s conclusion was that the economic environment complicates the assessment of policy changes, not that tax cuts are the most effective way to create jobs:
What Romer and Romer’s study (and their earlier work on monetary policy) shows is not that tax cuts are uniquely effective, but rather that failing to consider the reasons for policy changes leads to underestimates of the effects of all types of stimulus.
A more recent paper Romer coauthored concluded that government investment create more jobs than tax cuts. As this table that Romer and Jared Bernstein compiled shows, government spending has a stronger multiplier effect, and is therefore stronger stimulus:
As Reagan advisor Martin Feldstein wrote, “While good tax policy can contribute to ending the recession, the heavy lifting will have to be done by increased government spending.” Mark Zandi, chief economist at Moody’s Economy.com recently explained why: though tax cuts act more quickly, they “do not have the same economic bang for the buck as increased government spending, as households will save some of the tax cuts or use them to repay debt, and purchase imported goods.”
8 Responses to “Conservatives Distort Research To Claim They’ll Create 6.2 Million Jobs”
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So how many jobs did the Bu$hco tax cuts for the top 2% produce?
January 29th, 2009 at 12:45 pmOther than housekeepers, dog-walkers, gardeners – the only new workers who got more than $7/hr were hedge fund managers.
First someone should explain why Romer’s conclusion are valid. In my view, her analysis is weak.
January 29th, 2009 at 1:01 pmThe Truth: Republicans don’t plan to do anything except undermine Obama and the Democrats. Republicans love themselves and their ultra-rich cronies. They hate blue collar workers and poor folks.
January 30th, 2009 at 1:10 pmTax cuts won’t do a lick of good when there’s no capital being invested.
Why no investment, Republicans exclaim? Because consumer spending is collapsing — duh — so there are few business plans that will attract any private investment capital.
Democrats should simply cancel the capital gains tax for the next 5 years, just to shut up the Flat Earth Society Republicans… there’s gonna be so little capital gains that it won’t matter.
Only old fashioned “pump priming” by the federal government will, gradually and over a long time, get consumer spending back up. And seeding “green” & healthcare & infrastructure industries will, gradually, attract private capital to those industries and create long-term jobs & growth.
January 30th, 2009 at 3:30 pmUnder Bush, I think the neo cons were hoping to bankrupt the country so that they could once and for all get rid of all those pesky social programs (ie those programs that actually benefit people like Medicare, Social Security, public schools, etc.)that they hate. They did a great job of bankrupting the country, but ultimately their plan has backfired since their other great dream of havng a “permanent Republican majority” has come to naught, and now the Democrats and the American public are left to try and clean up the colossal mess they have made. Having tanked, the Republicans are now screaming for bipartisanship, something in which they had NO interest when they were in control and which they would rather die than accord to the Democrats. The Republican Party has become ever more irrelevant, and as it seems to be composed mostly of older white men (Sarah Palin excepted) will continue to decline in support in our multi cultural, multi ethnic society. Can’t happen soon enough!
January 30th, 2009 at 3:45 pmWhy not stop all of the foolishness and have the people vote/a referendum/ on who gets the money? Us the taxpayers or the failed institutions whom have put us to this misery. They say it will take 7.3 trillion dollars to but out the mess we are in. That is close to 100,000 for each taxpaying family. Go figure! What is the better deal? Those who don’t want the cash can wait for the stimulus to take effect….sometime in 2015.
January 30th, 2009 at 10:24 pmWhile President Bush held office the republicans lost jobs for americans. Now,suddenly they are claiming to have a stimulus package to create 6.2 millions jobs.A day late,and a dollar short me thinks!
January 31st, 2009 at 12:37 am“Tax cuts won’t do a lick of good when there’s no capital being invested.”
good point
February 24th, 2009 at 12:09 pm