by Rick Moran at PJ Media
Joe Biden’s $2.3 trillion infrastructure, the “American Jobs Plan,” has been touted by the White House as a job-creating engine that will boost the economy into post-COVID overdrive.
There’s a problem with calling it the “American Jobs Plan.” It would actually cost the American economy about 100,000 jobs, according to the Tax Foundation.
Hundreds of billions of dollars would be spent on non-infrastructure items like climate change, child care, “income equality” schemes and other programs totally unrelated to infrastructure. And yet, the big problem for the American Jobs Plan is in raising corporate tax rates.
The Tax Foundation looked at both job creation in the spending programs and job loss through higher taxes. To no one’s surprise, they don’t balance out.
This finding is all the more damning since the Tax Foundation analysis relies on conventional assumptions about multipliers. Per the Congressional Budget Office, that most inside-Washington of inside-Washington economic establishments, the report assumes a 5 percent return for the Jobs Plan’s public investments, and a long-run increase in GDP of about 0.3 percent as a result of boosted infrastructure spending. If you build it, the economy will grow—or at least that is what this report assumes.
If you tax it, on the other hand, the results are rather different. And that’s where the problems begin. According to the Tax Foundation report, the “positive economic effect is entirely offset by the increase in corporate taxation, resulting in less corporate investment which reduces GDP by 0.5 percent in the long run, reduces wages by 0.5 percent, and eliminates 101,000 full-time equivalent jobs. Gross national product (GNP), a measure of American incomes, falls by 0.3 percent in the long run—somewhat smaller than the drop in GDP—as the combination of permanent tax increases and temporary spending would in the long run reduce the deficit and payments to foreign owners of the federal debt.” Ah.
The White House sorta, kinda forgot that raising taxes will cost jobs. That’s convenient when you’re trying to sell a multi-trillion plan to Congress but hardly the point when it comes to real economic growth.
That’s the big takeaway from a recent analysis by the center-right Tax Foundation, which found that the “the combined effects of the tax changes and spending would reduce U.S. gross domestic product (GDP) in the long run by 0.5 percent and result in 101,000 fewer U.S. jobs.” So: A smaller economy and fewer domestic jobs. Take that, China!
But how else can we even partially fund all those green initiatives? Or pay for everyone’s child care? Or pay off Democratic voting blocs?
We’re not going to fund it anyway so why bother? Just have the Fed wave its magic wand and — like always — pull the cash from up their sleeves:…