Rescuing the American Economy: How the Stimulus Creates Jobs

Heather Boushey

Late last Friday the Senate reached a compromise on an economy recovery package. The House has already passed a package, and what happens now is that the two bills have to go to conference. The House bill and the Senate bill are slightly different; IÕm going to go through a few of the criticisms that people have been talking about in terms of the package.

First off, a lot of folks have been talking about how thereÕs not enough tax cuts in the package overall. There has been a lot of economic analysis thatÕs been done that shows that tax cuts give you very little bang for the buck. You put a government dollar of tax cuts out there in the economy, and you get a lot less back than with other kinds of government spending. They create the fewest number of jobs relative to direct spending and going out there and doing aid to the states and helping low income and unemployed folks.

The money that weÕre spending now is going to increase our deficit, but I cannot underscore how important it is to recognize that the opportunity cost of not doing so is far greater than any future defect. We have millions of Americans that are unemployed right now; over the last three months we have lost 1.8 million jobs, the largest three-month job decline since the end of World War II. If we donÕt act now, we are going to continue to see these job losses accelerate. The money that we are spending in communities around the country on projects that these communities want will create jobs. And that is the goal of the package, to get people back to work quickly while laying the foundation for long-term economic growth.