I was reading Can Anyone Really Create Jobs? from the New York Times. In the article, it is argued that, though more spending on the part of consumers is needed to improve the economy, a $400 billion jobs package may not be able to trigger spending patterns that existed before the economic crisis.
With no new theories, Democrats dusted off the big idea from the Great Depression, John Maynard Keynes’s view that government can create jobs by spending a lot of money. The stimulus, however, has to be borrowed, and it has to be really, truly huge — probably something like $1.5 or $2 trillion — to fill the gap between where the economy is and where it would be if everyone was spending at pre-recession levels. The goal is to goad consumers into spending again. And President Obama’s jettisoned $400 billion jobs package, hard-core Keynesians argue, is nowhere near what it would take to persuade them.
Can a government stimulus cause a sustained improvement in the economy when that stimulus money will have to be borrowed?