WASHINGTON -- President-elect Barack Obama is fixated on the size and cost of the infrastructure spending package he will propose next year, believing that the bigger the price tag, the more effective it will be.
His stimulus plan will be "big," it will be "bold," it will give the economy "a jolt," Obama keeps saying as the package's costs grow ever larger and economists continue to question its validity. Originally, the price tag was about $500 billion over two years, then $700 billion, then $800 billion, and now there is talk among his advisers of $1 trillion or more.
Early in the plan's gestation period, economic policy analyst Cesar Conda did the math and figured out Obama's stimulus plan -- to create or preserve 2.5 million jobs -- would cost taxpayers $280,000 per job.
America did not become the biggest and most successful economy in the world by accepting that kind of irrational, wasteful and unsustainable job cost ratio. "Most of this money won't go directly into people's pockets, but through inefficient government programs and agencies," Conda told me.
Don't expect the nightly news programs to subject Obama's gold-plated economic-stimulus plan to even a cursory analysis or ask the simplest questions about how, or whether, it will work. They seem to be taking his proposals at face value.
I have asked some top economic and fiscal analysts to give me their honest opinion about it, and here's what they told me:
Stanford economist John Cogan: "The federal government tried public-infrastructure spending during the recessions of the 1970s and 1981, and it failed to bring about an economic turnaround.
"The superior alternative, among a limited set of options, is permanent across-the-board tax rate reductions on capital and labor. Such reductions take time to work, but experience from the early 1980s and after 2001 shows they will work. Assistance to households facing economic hardship can and should be given. But policies that provide assistance shouldn't be confused with policies that will help turn the economy around," Cogan said.
But what exactly is the theory behind spending stimulus bills? Can the federal government miraculously spend money on public-works jobs and, thus, jumpstart a $14 trillion private economy?
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