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227 pages, Hardcover
First published August 15, 2006
...[Tom DeLay] called the postponement of the Medicare benefit a "non-starter." He even defended his own $114 million in pork projects from the highway bill. "My earmarks are pretty important to building an economy in that region," said DeLay.
Such was the standard defense of the highway bill that the leadership and every defender of the highway projects used all year, but it was built on a fallacy. Government spending, even on highways, won't actually create any new economic growth or private-sector jobs in the aggregate. To spend money on anything, the government has to first tax that money out of the economy or borrow it from the capital markets. While supporters of a government project will argue that it creates employment for some, they fail to mention that the taxes or debt—a form of future taxes—will inhibit employment of others.
Experts within the federal government understand this. A 1993 study from the Congressional Research Service notes that employment gains from increased transportation spending would likely be offset by losses in other parts of the economy due to the increased taxes or debt to finance the spending. The authors of a 1992 Congressional Budget Office study even went so far as to ask an important question: "If [these proposals really create jobs], why not just keep adding new programs until full employment is achieved?"