UD, Yale economists push for 'super stimulus' to add jobs
A couple of University of Delaware economists claim the government could well afford a 300 percent jump of the government's planned tax cut, unemployment, purchase and other stimulus payments, to $800 billion, instead of the planned $200 billion, in the second half of 2010
While President Obama said over the weekend he wants to give last Spring's "stimulus" spending time to speed the economy and slow job loss, instead of boosting it, a couple of University of Delaware economists claim the government could well afford a 300 percent jump of the government's planned tax cut, unemployment, purchase and other stimulus payments, to $800 billion, instead of the planned $200 billion, in the second half of this year.
What would that accomplish? Citing data from Yale economist Ray Fair, UD's Laurence Seidman and Kenneth Lewis project unemployment will fall to below 8%, from the current 9.5% and rising, as companies add 4.6 million jobs due to higher government payments and purchases, instead of the projected 1.7 million additional jobs. They also treat the increase as permanent, on the theory more jobs create their own "macroeconomic" recovery, even if the "stronger" stimulus ends next year.
How could we afford this? Debt as a percentage of gross domestic product is already expected to rise to around 52%. Adding most of the cost of a bigger stimulus, the debt ratio rises to "only" 53.7%, which Seidman and Lewis consider a small price to pay for adding a few million jobs. Seidman says he'll send a longer version of his and Lewis' position to anyone who asks me for a copy.