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Must Read: Government Spending Creates Jobs, Period

The endlessly-repeated Republican idea that government spending “kills jobs” and spending cuts are the surest route to job creation is both wrong and dangerous, argues former Federal Reserve vice chairman Alan Blinder in today’s Wall Street Journal. The idea that federal spending kills jobs is ridiculous on its face. In fact, even dumb federal spending – on, say, ethanol subsidies or “bridges to nowhere” – creates jobs. Republicans are using the phony jobs argument to justify doing what they want to do anyway, on principle, which is to shrink government. Blinder worries that if this idea keeps gaining traction “one frightening consequence is that our limping economy might have one of its two crutches – fiscal policy – kicked out from under it in an orgy of premature expenditure cutting.” In other words, just as spending creates jobs, cutting spending in a downturn will surely stifle job creation. Blinder’s not saying we ignore the problem of the long-term deficit, but there are ways, he says, to spend to create jobs in the short term (say, via a payroll tax credit for firms that add to their payrolls), while reining in the debt over the long haul. Otherwise, “as long as one political party clings to the idea that government spending kills jobs, it’s hard to see how we extricate ourselves from this mess.”

‘The GOP Myth of ‘Job-Killing’ Spending’ [Alan Blinder/Wall Street Journal]

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