It’s a short story. A Harvard economist estimates that each job in the White House Jobs Plan will cost about $200,000. Even Treasury Secretary Timothy Geither agrees with the Harvard Economist. That should be the end of the story. But no, Geithner says the $200 thou is okay because we have no other “options” for moving our economy forward.
You’ll see below exactly what economist Martin Feldstein had to say, and indeed he did say each job would cost $200,000 to create, and that cost is not a good use of money, to which interviewer Judy Woodruff asked:
I think the point I want to ask you, picking up on what he said, is, is the situation not desperate enough in terms of needing jobs that, even if it just adds up to some jobs and they cost a lot, it’s worth it?
You can’t make this stuff up!
MARTIN FELDSTEIN: So, I have looked at what the various forecasters say this might do. And the most optimistic ones say that it will add between one and two million jobs over the next two years. And that sounds like a lot, until you realize that that’s about $200,000 per job, $200,000 per job.
So it’s just not a good use of money that — of course, it has to be paid for. And we haven’t talked about that yet, but it’s not a good use of money to spend $200,000 to create a single job…
JUDY WOODRUFF: I think the point I want to ask you, picking up on what he said, is, is the situation not desperate enough in terms of needing jobs that, even if it just adds up to some jobs and they cost a lot, it’s worth it?
MARTIN FELDSTEIN: It’s just — I don’t think it is worth it.
And, moreover, if you’re going to finance this, then the financing is going to have negative effects on employment. So when we talk about the forecasts that say this could add a couple of million jobs at a cost of $200,000 per job, that’s on the assumption that you’re not offsetting it by higher taxes on businesses and on high-income individuals.
The above quote was part of an interview with Feldstein, Judy Woodruff and Austan Goolsbee, one of Obama’s former Chairmen of the Economic Advisery Council.
Here is another interesting assessment from Feldstein:
JUDY WOODRUFF: Professor Feldstein, I’m going to talk with you.
Let’s talk about the tax cuts in the president’s plan first. This notion that he would cut the Social Security payroll tax in half for employees, expanding it, and then extending it to employers, what effect would that have on jobs, do you think?
MARTIN FELDSTEIN: It would have a very small positive effect, the part that households get, that employees get. The part that employers get I think would basically be just saved, added to retained earnings. So that would have almost no impact at all.
JUDY WOODRUFF: Why don’t you think it would have a greater impact on employers?
MARTIN FELDSTEIN: Oh, because you’re talking about a 3 percent of payroll reduction. So if you’re going to hire somebody and pay them $30,000, it’s $900 a year. That’s tax-deductible against their corporate rate. So it’s $600. So, for $600, they’re not going to make the decision to make a permanent hire.