Tuesday, March 1, 2011

Financial Integrity Versus Jobs

An interesting dilemma - the Republicans are trying to cut the budget but, unremarkably enough, the media reports that would cause a reduction in jobs - 400,000 jobs if there is a cut of $100 billion.

When asked about this, Boehner says "so be it" - and he sounds uncaring, but I think he met that was a reality that had to be incurred.

Rick Scott, the governor of Florida, turned down $2.4 billion for a high speed train - reporting that the current rail system only gets fares that cover 1/6 of the costs!  Plus he expects that Florida would be responsible for all overruns on the construction.  He is not willing to do that to his state even though obviously the state will not get the benefit of the jobs for building the train.

So, should we "buy" more jobs by spending more and have it not be economical or should we be fiscally responsible?  The latter, of course, works out best for the long term, where financial losses are avoided..

How far should we go to buy jobs - we could spend a trillion more dollars to try to solve our unemployment problem, which could produce 2 million to 4 million jobs (per old estimates) - but we'll have to pay for it later with more taxes.   2,000,000 jobs at an average of, say, $40,000 each equals $80 billion dollars - if average taxes were at 20%, we would have $16 billion back toward the deficit.  That doesn't quite work, even if you add back potential savings in unemployment payments or using an economic "multiplier". 

Of course, there is human welfare at stake in avoiding people being unemployed, but where is the limit?

A tough decision - but it would appear that long term integrity will work out the best - and, as always, decisions have costs to them.

What do you think?  (Include specifics and numbers where possible)

The Non-Politician .

See also Is The Wisconsin Governor Justified In Busting The Union? (under Unions).