By raising government spending over the next two years, the budget deal being discussed among congressional leaders would create the equivalent of 500,000 new jobs over the next two years, the White House said Tuesday.
“This agreement strengthens both short and long-run growth, setting the stage for more, higher-paid jobs,” White House economic adviser Jason Furman wrote in a blog post on the White House site Tuesday morning.
By highlighting the possibility that the deal could provide fiscal stimulus and boost growth, the Obama administration is encouraging congressional liberals who might be reluctant to support the compromise. The draft that Congress will consider in the next few days includes some spending reductions in entitlement programs opposed by liberals.
Furman noted that the deal would result in $111 billion in federal spending over the next two years. That includes $80 billion in spending above the caps set in previous law, as well as $31 billion in additional spending through a war account that is not subject to the caps.
Based on estimates from the nonpartisan Congressional Budget Office, Furman said the additional spending would translate to the equivalent of 340,000 new jobs through 2016 and 500,000 through 2017.
Job growth would accelerate, in Furman’s view, because the federal spending would boost demand for goods and services in the economy, stimulating economic growth. Such a stimulus would be helpful because “there is still some slack” in the economy, Furman wrote.
He added that the deal would stoke growth by eliminating uncertainty about the government’s functioning from business’ decision-making and boost federal spending on research and development.
