The Obama-Biden Plan states with respect to infrastructure spending:
Obama and Biden's $25 billion investment will result in 1 million jobs created or saved, while helping to turn our economy around.
Using the 1.5 government purchases multiplier reported in Appendix 1 of the Romer-Bernstein jobs report, $25 billion leads to $37.5 billion in GDP. The Romer-Bernstein report also states that when deriving jobs estimates from fiscal stimulus:
We therefore use the relatively conservative rule of thumb that a 1% increase in GDP corresponds to an increase in employment of approximately 1 million jobs ...
One percent of our current $14 trillion GDP is $140 billion. So, something doesn't square. For the $25 billion in infrastructure stimulus to lead to 1 million jobs, the multiplier must be 5.6. Even if the Romer-Bernstein rule of thumb is conservative, the true impact of GDP on jobs can't be 3-4 times larger.
Also, the Obama-Biden plan would:
Invest in a clean energy economy and create 5 million new green jobs: Obama and Biden will invest $150 billion over 10 years to advance the next generation of biofuels and fuel infrastructure, accelerate the commercialization of plug-in hybrids, promote development of commercial scale renewable energy, invest in low emissions coal plants, and begin transition to a new digital electricity grid. The plan will also invest in America's highly-skilled manufacturing workforce and manufacturing centers to ensure that American workers have the skills and tools they need to pioneer the first wave of green technologies that will be in high demand throughout the world.
The $150 billion (over 10 years) would lead to $225 billion in additional GDP with a 1.5 multiplier, a 1.6% increase over current GDP. Given the Romer-Bernstein rule of thumb, 1.6 million green jobs will be created as a result. In order for the $150 billion 10 year clean energy stimulus to lead to the goal of 5 million, jobs, the multiplier must be 4.67.
Am I doing something wrong? Or are the two documents inconsistent?
