President-elect Barack Obama said this weekend he's planning to introduce an economic recovery program that would create 2.5 million jobs by January 2011. Obama supports infrastructure and green energy spending as job creators--putting people to work building roads and bridges, hybrid cars and wind farms. Estimates show it could take between $75 billion and $100 billion in ready-to-go infrastructure projects to create 1 million new jobs.
Here are a few economists' takes on this kind of spending:
Larry Summers: "Properly designed infrastructure projects have the virtue of being helpful as short run stimulus, especially for the employment of the workers most hard hit by the housing decline, while at the same time augmenting the economy’s productive potential in the long run."
Brian Wesbury and Robert Stein of First Trust Advisors: "Every dollar of extra government spending has to come from the pocket of someone else who would have spent the money. True, the private sector may not spend that money in the short run given recent risk aversion hysteria, but we sense that much of the extra government spending will occur long after the hysteria has passed."
Martin Feldstein, a Harvard University professor: "The key is to be big, quick and targeted at job creation. The infrastructure has to be chosen carefully or it will come too late."