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The Government Does Not Create Jobs, Rep. Mica

Posted By Conn Carroll On October 30, 2008 @ 11:10 am In Economics | Comments Disabled

During yesterday’s House Transportation and Infrastructure Committee Rep. John Mica (R-FL) claimed: “Every billion dollars in spending on infrastructure, on highway and transportation expenditures does result in 35,000 new jobs. [1]

Too bad Mica wasn’t listening to the Ways and Means Hearing across the hall where economist Alan Viard told the committee: “Changes in infrastructure spending are not an effective method of creating jobs or providing short-run fiscal stimulus to the economy.” The Washington Post [2] further reports: “Viard is a former Bush administration economist now at the American Enterprise Institute. But he rattled off a list of other experts, ranging from those at the nonpartisan Congressional Budget Office to key Democratic advisers, who have reached the same conclusion. Among them: two former Clinton administration economists who wrote in January that spending on infrastructure is among the less effective options for forestalling recession.”

Barack Obama advisor Jason Furman has also written about how terrible a job creator infrastructure spending is: “In the past, infrastructure projects that were initiated as the economy started to weaken did not involve substantial amounts of spending until after the economy had recovered. [2]

But if Mica does not want to listen to these hard core liberals, maybe he’ll listen to some conservatives. Heritage fellow Ron Utt surveys the literature [3] on infrastructure spending and concludes: “As this paper demonstrates, most of the alleged economic benefits are based on grossly exaggerated claims made by a U.S. Department of Transportation (USDOT) computer simulation conducted in 2000 and 2002. In fact, the vast majority of independent academic and federal government studies on the rela¬≠tionship between infrastructure spending and eco¬≠nomic activity have found that the impact is very modest and long in coming.”

And Arthur Laffer puts it in simpler terms [4]: “Unfortunately in this world there is no tooth fairy. And the government doesn’t create anything; it just redistributes. Whenever the government bails someone out of trouble, they always put someone into trouble, plus of course a toll for the troll. Every $100 billion in bailout requires at least $130 billion in taxes, where the $30 billion extra is the cost of getting government involved.”


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2008/10/30/the-government-does-not-create-jobs-rep-mica/

URLs in this post:

[1] Every billion dollars in spending on infrastructure, on highway and transportation expenditures does result in 35,000 new jobs.: http://ap.google.com/article/ALeqM5jGcBHvnIaKwyq-VPObjMSdZvM4fgD944BPPGA

[2] The Washington Post: http://www.washingtonpost.com/wp-dyn/content/article/2008/10/29/AR2008102904125.html

[3] surveys the literature: http://www.heritage.org/Research/budget/bg2121.cfm

[4] puts it in simpler terms: http://online.wsj.com/article/SB122506830024970697.html

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