Ever wonder where the numbers purporting to show the government will create jobs come from? Ron Utt at the Heritage Foundation has an excellent and accessible report (Backgrounder No. 2121) breaking down the studies and why they are misleading. It’s worth a thorough reading by anyone tracking the debate over the stimulus package. As Utt notes:
As this paper demonstrates, most of the alleged economic benefits are based on grossly exaggerated claims made by a U.S. Department of Transportation (USDOT) computer simulation conducted in 2000 and 2002. In fact, the vast majority of independent academic and federal government studies on the rela?tionship between infrastructure spending and eco?nomic activity have found that the impact is very modest and long in coming.
Notably, Ron received his Ph.D. in economics from Indiana University (and a BA in business administration from Penn State) and has a largely empirical background in academic research. He know that which he criticizes. As an eonomist who has worked on teams generating these kinds of economic impact numbers, I can attest to the accuracy of Utt’s analysis as well.