Rescuing The Economy

How the Stimulus Works

There is a misconception out there about how the recovery and reinvestment package thatŐs moving through Congress works to create jobs. The package doesnŐt just create jobs by the government hiring people; itŐs about creating a broader economic growth, about creating an upward spiral.

For example, the government goes out and it contracts with a bridge builder to build a bridge. Not only does the bridge builder employ people and that creates jobs, of course, but the bridge builder also contracts with othersŃthe bridge builder buys supplies to build the bridge, the bridge builder has a payroll firm that does its payroll, and that firm hires more people. As the benefits of that one bridge propagate out and reinforces it and all of these business are patronizing each other and building confidence in the economy.

The direct spending has the virtue of directly creating jobs, directly spurring business confidence, so that we get to this upward spiral and so we get strong economic growth.