Eric Cantor, the Republican Whip, makes some excellent observations on his blog:
Democrats have suggested that a large part of the stimulus will be spent on vital infrastructure projects that are “ready to go” or “shovel-ready”. In preparation for the stimulus, the Conference of Mayors has published a list of such projects on their website. Their list includes items such as:Read the whole thing.
$350,000 for an Albuquerque, N.M., fitness center;
$94 million for a parking garage at the Orange Bowl in Miami;
$4.5 million for Gretna, Florida, to bottle water with recyclable bottles;
$35 million music hall of fame in Florissant, Missouri;
$55 million for a mob museum in Las Vegas (described in the mayors report as “Historic Post Office Museum Rehabilitation”);
$20 million for a minor league baseball museum in Durham, North Carolina; and
$6 million for snowmaking and maintenance facilities at Spirit Mountain, Minnesota.
If the stimulus costs $1 trillion and creates or saves only 3 million jobs, that is a per job cost of $333,000.
In short, it is simply impossible for the government to spend anything close to the numbers being bandied about in a timely manner, and in a way that doesn't result in massive waste, fraud, and inefficiency. The more we hear about such absurdities as spending $333,000 to save or create a job which most likely pays only $50,000 per year, the quicker this exercise will be revealed for the sham it really is. And the longer the arguments are drawn out, the greater the chance that we will discover that massive stimulus is no longer necessary.
If the economy really does need massive help, and I'm not sure it does, the best way to provide immediate relief and stimulus is to cut taxes on capital. When you cut taxes on something, you tend to get more of it. If we increase the after tax return to putting capital to work in the U.S. economy, we will increase the amount of capital available to invest, and that in turn will increase the demand for labor (adding capital to an economy has the immediate effect of creating a shortage of labor, which in turn leads to more hiring). We will end up with more jobs, and they will be more productive and higher-paying jobs. The private sector is the best job-creation machine imaginable.