The Cost of Stimulation

$825 Billion. That is the latest price tag placed on President Obama's stimulus package. Let's write the cost out to enhance our grasp of this cost: $825,000,000,000. As with any other price tag, we should strive to understand what we Americans get in return for $825,000,000,000.

First, we should deduct from this cost the portion of the stimulus plan that is made up of tax cuts. This is not a true cost to Americans - in fact, it is the opposite for our wallets. It is only a reduction of the Federal Government's revenue. At an estimated $300 Billion in tax cuts, the real cost of the stimulus initiative would be more akin to $525 Billion. 

But here we encounter a problem because issuing a refund check to someone who does not pay income taxes is a hand-out, not a tax cut. As maintained in previous posts, the swiftest, fairest, and most effective way to provide a tax cut is to immediately reduce payroll taxes. Disappointingly, this does not appear to be part of the plan's design.

So, truly, until we know how much of the $300 Billion are thinly-veiled handouts, we do not know the real cost of the stimulus plan. Therefore, we have no other figure to work with than the aforementioned $825 Billion.

Back to the question at hand -- what do we get in return for $825 Billion? Let's take Barack Obama at his word in stipulate that it is all about jobs. To be fair, Mr Obama did stress the importance of jobs during his campaign. Look no further than Joe Biden's mid-October claim that the number one problem facing the middle-class happens to be a three letter-word: J-O-B-S. Imagine the press reaction had Sarah Palin said that.

The President insists that his plan will create or save 3.5 million jobs. This jobs goal is a bit opaque because I cannot fathom a way to quantify how many jobs are saved. How do you prove that the money that was spent prevented a job loss?

Let's move on. The Obama administration thinks its a good idea to exchange $825 Billion for 3.5 million jobs. Okay then, my calculator renders a cost per job of approximately $235,000. Seems a tad high, correct? 

Far better just to give each of the 3.5 million job loss victims $35,000 each. Then the stimulus plan can be called an Unemployment Assistance Plan and cost $122 Billion. Our children and grandchildren may appreciate that we did not burden them with the extra $703 Billion.

Just an idea.