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Jobs and the Stimulus: A Guessing Game

Predicting how many jobs a stimulus plan might create is as much a matter of ideology as science. Estimates hinge on what "multipliers" economists plug in to predict changes in Gross Domestic Product -- and can vary widely, as the examples show. As a rule of thumb, a 1 percent change in GDP affects 1 million jobs.

Democrats: 3,675,000 jobs

3.675 million jobsThis estimate is based on a roughly $800 billion hypothetical plan similar to the House-passed stimulus plan, including about $300 billion in tax cuts.

Tax Cut Impact: Assumes a multiplier of .99 -- or only 99 cents of GDP growth for every $1 in tax cuts.
Spending Impact: Assumes a multiplier of 1.5 -- or for every $1 spent, GDP will grow $1.50.

 

Congressional Budget Office: 1.2 million to 3.6 million jobs

1.2 million jobs3.6 million jobsThe nonpartisan CBO looked at the field of possible multipliers and decided to cover the table.

Tax Cut Impact: Assumes a multiplier of between .5 and 1.7.
Spending Impact: Assumes a multiplier of between 1.0 and 2.5.

 

Republicans: 2,800,000 jobs

2.8 million jobsA plan from Sen. Jim DeMint (R-S.C.) and the Heritage Foundation relies solely on tax cuts.

Tax Cut Impact: Implies a multiplier of 3 -- or $3 in GDP growth for every $1 in tax cuts.
Spending Impact: Zero -- the plan includes no government spending.

 

Note: Estimates are jobs created or saved through the last quarter of 2010.

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