David Weigel of the Washington Independent asked several Republicans how their stimulus plan is going to create 6.2 million jobs. No Republican gave Weigal an answer. Republicans cited a 2007 study by White House CEA chair Christina Romer. I read this study last month. My memory is the study is insanely boring and does not deal with the current economic crisis. It does mentions tax cuts as a possible form of stimulus. Republicans ran with that.
Just ahead of a House vote that they're expected to lose along party lines, Republicans insisted Wednesday that their own plan, focusing on tax relief, would create twice as many new jobs — 6.2 million — as the plan Obama is pushing, while costing about half as much.
House Minority Leader John Boehner said Republicans remain "disappointed" in the stimulus plan coming to a vote. He says it includes a "lot of wasteful spending that won't create jobs."
The White House issued a press release on how Republicans are creatively interpreting of Romer's prerecssion study.
CEA Director Romer’s view is that the House analysis is absolutely incorrect. The CEA estimates that the Republican plan would create only 1.7 million jobs, compared to 4.2 million for the Democratic plan.
Question: The House claims that based on the research of CEA Chair Christy Romer, their plan would create 6.2 million jobs. Isn’t that a more effective way of jumpstarting the economy?
Answer: The Republican House analysis is flat wrong in its claim that the House Republican stimulus is more effective. No matter what your analytical assumptions, as long as they are consistent the plan the President supports would result in substantially greater job creation than the House Republican plan.
Independent groups that have analyzed the President’s plan -- from Macroeconomic Advisors to former McCain advisor Mark Zandi -- have confirmed that the President’s plan will create between 3 - 4 million jobs--twice the number of the House plan. The President supports takes a broad, comprehensive approach. It includes substantial tax cuts – many of which mirror the provisions in the House Republican plan. But it also includes new spending programs that many economists across the spectrum believe will help create jobs and give our economy a kickstart right now.
Question: But doesn’t Dr. Romer’s research show that the economic impact of tax cuts is higher than even the Administration is assuming?
Answer: Dr. Romer’s research suggests that all types of fiscal stimulus, both spending and tax cuts, might well have a larger impact than is typically assumed and is assumed in the CEA's analysis. It would be great if that were so. It would mean more job creation and more economic activity -- which is exactly what we need right now. The Administration has based its analyses on more modest assumptions that are in line with those several independent forecasters – Republican and Democrat alike.
We should have an open discussion about these analytical issues.
We cannot afford to play political games with apples-to-oranges comparisons. Such political gamesw distract our attention from the magnitude of the substantive task at hand.
Romer and her husband examined macroeconomics effects of different tax policies from different eras. Their study was never meant to be a blueprint for stimulus. The question remains: where did Republicans get the magic number of 6.2 million jobs?