Printer Friendly

Dollar follies: Beltway econ IOI. (Citings).

WHEN IS A dollar not a dollar? When it costs you $1.40, according to a new study released by the Joint Economic Committee (JEC). If you don't buy that number, try listening to Senate Majority Leader Tom Daschle (D-S.D.). He says a dollar is really worth $2.15.

"Hidden Costs of Government Spending," a report released in December by JEC Chairman Jim Saxton (R-N.J.), offers a frightening throwback to freshman economics. It explores in full detail the concept of "deadweight loss," which measures the "hidden" cost of government spending by taking taxation's effect on prices into account. You can link to the lesson at www.house.gov/jec, or skip the gory details and read it here: Every extra dollar of government spending costs the economy $1.40. According to the study, that's because of expensive red tape and the efficiency lost in robbing Peter to pay Paul.

Saxton's report was only one shot in the long battle over how much to spend on stimulating the sluggish economy. Sen. Daschle and friends held a press conference to unveil their own figure. According to these big spenders, every extra dollar in federal spending directed at low-income and unemployed workers would actually boost the economy to the tune of $2.15. The gain comes courtesy of the magical "money multiplier," yet another bad memory for graduates of Econ 101.

So how much is a dollar really worth? That depends on which dead economist you believe. Here's hoping the folks on Capitol Hill come to a consensus pretty soon, however: Any stimulus plan that passes both the House and the Senate will likely be in the billions--a lot of cash, no matter how you do the math.
COPYRIGHT 2002 Reason Foundation
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2002, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
Printer friendly Cite/link Email Feedback
Author:MacDonald, Sam
Publication:Reason
Article Type:Brief Article
Geographic Code:1USA
Date:Mar 1, 2002
Words:287
Previous Article:25 Years ago.
Next Article:Courtroom coup: Bye-Bye, jury. (Citings).
Topics:


Related Articles
Foreign Aid and Domestic Politics: Voting in Congress and the Allocation of USAID Contracts across Congressional Districts.
Editor's corner.
L.A.'S CELL HABIT COSTLY.
Blessed are the muckrakers: Michael Moore and other contemporary truth-tellers can trace their lineage to the biblical prophets and godly gadflies...
Afterword: for further discussion: Conference on Social History October 22-24, 2004.
Pass-fail.
Letter to the editor.

Terms of use | Copyright © 2017 Farlex, Inc. | Feedback | For webmasters