Confusing the Myth and Reality of Job Creation

Henry Oliner
Alan Binder writes in the Wall Street Journal Online, The GOP Myth of 'Job-Killing' Spending, June 21, 2011. In this article he challenges the argument that the deficit is killing job creation. He notes that logically one could argue that the taxes needed to fund government jobs  must come from the private sector and that the taxes used would simply reduce jobs in the private sector by the same amount.  This does assume the same efficiency of spending, which is rarely the case.  But he notes that taxes are not going up  (yet) and this therefore cannot be the case today. Binder then attacks the idea that government spending crowds out private spending and drives up interest rates thus costing private sector jobs.  But this argument, he contends,  seems spurious since interest rates are so low. And finally he attacks the common refrain that 'uncertainty' restrains growth. The data shows increases in capital spending, thus refuting the fear of...(Read Full Post)

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