Tuesday, February 2, 2010

the govt tries to create job with a pittance-- while making business more painful and risky

From the AP's Martin Crutsinger (hat tip: C-J)...

The Obama administration on Sunday endorsed spending an additional $100 billion to attack painfully high unemployment as it prepared to send Congress a $3.8 trillion budget...

White House spokesman Robert Gibbs said the administration believed "somewhere in the $100 billion range" would be the appropriate amount for a new jobs measure made up of a business tax credit to encourage hiring, increased infrastructure spending and money from the government's bailout fund to get banks to increase loans to struggling small businesses....

It'd be amazing if $100 billion could fix the recession. But that's less than 3% of the budget and less than 1% of the economy. Even with multiplier effects, it's difficult to imagine it doing much good-- even ignoring the negative impact on the debt, real interest rates, etc.

It'd be far better to leave it alone (for the first time in two years)-- and reduce the risk by eliminating the possibility of painful policies like cap & trade and health care mandates or payroll taxes.


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