Politics

Nobel Prize Winning Economist Paul Krugman Addresses Misleading Criticism of American Recovery and Reinvestment Act

By Office of the Speaker

This week, the House will vote on the American Recovery and Reinvestment Act, working from priorities shared with President Barack Obama.

The plan will create and save 3 to 4 million jobs, jumpstart our economy, and transform it for the 21st century.

Unprecedented accountability and transparency measures are built in to help ensure tax dollars are spent wisely. $550 billion is strategically targeted to priority investments; $275 billion in targeted tax cuts will also help spur economic recovery.

In today?s New York Times, Nobel Prize winning economist Paul Krugman addresses misleading criticism by opponents of the American Recovery and Reinvestment Act:

First, there?s the bogus talking point that the Obama plan will cost $275,000 per job created. Why is it bogus? Because it involves taking the cost of a plan that will extend over several years, creating millions of jobs each year, and dividing it by the jobs created in just one of those years.

It?s as if an opponent of the school lunch program were to take an estimate of the cost of that program over the next five years, then divide it by the number of lunches provided in just one of those years, and assert that the program was hugely wasteful, because it cost $13 per lunch. (The actual cost of a free school lunch, by the way, is $2.57.)

The true cost per job of the Obama plan will probably be closer to $100,000 than $275,000 ? and the net cost will be as little as $60,000 once you take into account the fact that a stronger economy means higher tax receipts.

Read the full column>>

Full post as published by The Gavel on January 26, 2009 (boomark / email).