The Jobs Bill: A Step in the Right Direction, or More of the Same?

By Michael Hughes

With all of the talk over health care reform, it is easy to overlook the many other pieces of legislation currently before Congress.  One such piece of legislation, the jobs bill, formally known as the 2010 Jobs for Main Street Act, has been thoroughly eclipsed in the media by the recently passed health bill.  However, a bill that calls for almost $50 billion in federal spending should not be taken lightly.  While such spending may pale in comparison to the bailout money given to various financial firms through the TARP program, people should take note of any large government expenditure.

Interestingly enough, the bill takes money away from the TARP program and uses it to fund a variety of public works projects and tax cuts.  Again, $50 billion is a small sliver of the TARP funds but significant nonetheless.  Congress recently passed this bill, which is designed to stimulate employment through a combination of tax breaks for employers who hire the unemployed and an allotment of a large amount of money for construction and employment projects.  However, it is important to look at the necessity of the projects in question.  Amtrak is a recipient of hundreds of millions of dollars from the bill, and that entity has represented one of the most egregious cases of government mismanagement.  What about the over $26 billion for police, firefighters, and teachers?  One has to ask whether there is a shortage of those jobs.  Is crime, fire, or the population of children dramatically increasing?  If not, the government should not devote more government money to those areas.  Instead, it should either use that money to pay off part of the deficit or give the money back to the public in the form of direct tax credits.

While more funding for highway construction, teachers, police officers, fire fighters, and youth employment programs sounds like a great idea, one has to ascertain whether or not such spending will only temporarily increase employment or actually help the economy.  The idea of using the federal government to stimulate the economy through spending dates to the Great Depression when FDR introduced numerous government programs as part of the New Deal.  “Priming the pump” was the analogy used in FDR’s time to express his idea of helping the economy.  The idea that the government could stimulate the economy through spending was championed by the British economist John Maynard Keynes, and it guided many nations’ economic policies in the mid 20th century.  Nevertheless, government intervention in the economy has a rather lousy track record.  The government may be able to create jobs, but it cannot create a demand for those services.  If the trains, roads, teachers, police, firefighters, and summer youth jobs outlined in the bill really were in that high of a demand, the government would have already spent the money on these items, or our country’s free enterprise system would have supplied these jobs, at least in the case of transportation issues.  Even if these are so-called “shovel ready” projects, all that means is that someone can pick up a shovel and start digging.  That does not mean that what is being dug is truly needed or even beneficial for the public.

While the bill at hand may be able to bring about necessary projects faster, the question should be whether or not the economy would be better off overall if the government just minimized its intervention in all forms.  This is not a likely possibility given the current composition of Congress, and even Republicans have shown their eagerness to increase spending and regulation.  However, if this country’s economy is to improve, a drastic reduction in government spending and regulation will be required.  There will always be boom and bust cycles in the economy, but government intervention can easily exacerbate these problems by misallocating funds that would be better spent by the private sector.

This entry was posted in Articles for Volume 3, Issue 3, Spring 2010. Bookmark the permalink.

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