I appreciate the thoughtful responses by both Howard Gleckman and Len Burman to the posts by me and John Bishop. I want to address one point that is brought up by both Howard Gleckman and Len Burman. Len Burman says that “the most effective way to boost employment is to boost demand”, not a revived New Jobs Tax Credit. Howard Gleckman says there is “Not much bang-for-the-buck” in a revived New Jobs Tax Credit, as “About two-thirds of the jobs it subsidized would have been created anyway.” It is true that the best available estimates of the impact of the NJTC suggest that only one-third of the jobs subsidized were actually induced by the NJTC. It should be noted that some such slippage is common with many government programs, including fiscal stimulus programs. For example, it is probably the case that some dollars devoted to anti-recession assistance to state and local governments will in fact merely subsidize spending that would have been undertaken anyway. But the bigger point is that even if only one-third of the jobs subsidized are truly induced jobs, a revived New Jobs Tax Credit would have an extraordinarily high bang for the buck. John Bishop, in his comment on Len Burman’s post below, estimates a GDP impact per dollar spent of somewhere in the range from $4.35 to $8.70. A back of the envelope way of calculating bang for the buck for a revived New Jobs Tax Credit is as follows. In my memo from October 2008, I estimated that a revived New Jobs Tax Credit might cost $26 billion and induce the creation of 1.3 million jobs. This calculation assumes that only 1 of 3 subsidized jobs are truly induced new jobs. A 1.3 million boost to jobs is a little less than a 1% boost to U.S. employment. Assuming the GDP impact is similar in percentage terms, the boost to GDP in a $15 trillion economy would be a little less than $150 billion. The “bang-for-the-buck” of a revived New Jobs Tax Credit would be a little less than $6 per $1 of fiscal stimulus. Mark Zandi of Moody’s Economy.com estimates fiscal bang for the buck of various fiscal stimulus options. None of his estimates exceeds $2 per dollar of fiscal stimulus. Therefore, it would appear that a revived New Jobs Tax Credit might have a bang for the buck that is triple other fiscal stimulus measures. Now, perhaps these estimates are exaggerated. As Howard Gleckman and Len Burman point out, there are arguments that can be made that these impact estimates of a revived New Jobs Tax Credit may be too high. But a revived New Jobs Tax Credit might make sense even if only 1 in 10 of the subsidized jobs were actually induced jobs. Even under these lower impact estimates, a revived New Jobs Tax Credit might be competitive with other proposed fiscal stimulus measures. A revived New Jobs Tax Credit deserves exploration because even modest impacts of wage subsidies result in high job creation estimates and GDP generation estimates per dollar spent. We are facing the possibility of a very weak labor market for at least the next two years and probably longer. As Paul Krugman has pointed out, during this period there will be a very large gap in the economy’s performance compared to potential GDP and potential employment. There are problems with all the fiscal stimulus measures that have been proposed. For example, it is unclear whether there are sufficient good infrastructure and spending proposals to adequately fill the large GDP and jobs gap. Therefore, we need to explore a wide variety of options for filling this gap. Some consideration of a well-designed New Jobs Tax Credit should be on the table for serious discussion.