Speaker John Boehner forwarded at three paragraph letter (wow, that must have been pretty comprehensive!) to the White House from 150 economists saying, among other things, “To support real economic growth and support the creation of private-sector jobs, immediate action is needed to rein in federal spending.” An interesting and valid claim, but one which does not fail to evoke controversy, especially among the general Washington concensus that the best solution to any economic problem is to throw money on it. The only thing most Rebublicans and Democrats really disagree on concerning this topic is whether they’re spending to make their constituents happy, or because they actually believe it’s going to solve any problems.
So naturally, this letter has triggered backlash from other economists, claiming that THEY, in fact, are the enlightened ones, and that evidence to support the claim that federal spending hurts job growth is “thin to non-existent” (see “crowding out” section in any Econ 101 textbook to read up on this “non-existent” evidence). I find it somewhat amusing that often times when a person gets a PhD in a particular discipline, they seem to believe that when they offer their take on a given issue, it must be fact. I understand that when one spends 6 years in graduate school, lives off of a steady diet of ramen and saltine crackers, and all the while gives up their social life, they tend to think that they are entitled assert their opinion in some priveledged fashion. Lets be honest though, these are economists we’re talking about, they weren’t going to have a social life anyway.
What none of these economists from either side seem to want to admit, is that at the end of they day, the real answer to the question of whether federal spending crowds out job growth is : it depends. Very anti-climatic, agreed, and doesn’t make for such a sensational letter to the president, but it unfortunately is true. Republicans are shy to admit that one of the best things that happened to our country over the last century was the creation of the interstate highway system for example, which was a MASSIVE federal spending program which worked, and DID spur long term growth… but not so fast here, what Democrats will not admit is that perhaps a federal stimulus which subsidizes butterfly research and blindly gives out checks to every administrative and regulatory body in the country may not actually create jobs (This was not included in the three paragraph letter from the etseemed economists to Mr Obama).
Let’s at least agree that this is not a black and white issue… and when the real answer is “it depends,” we should admit it, and not pretend our Princeton degree entites us to claim that it only depends if we say so… because when it comes down to it, ramen noodles aren’t that bad anyway, so get over yourselves, economists.