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Editor’s Note: In case you missed them, read Part 1 and Part 2 . Throw a rock in a still pond and you will observe many ripples. Throw a Recovery Act program in a stagnant economy and you will observe many jobs. Therein lies the lesson from our latest entry of the Recovery Act in Action, thanks to some truly thorough journalism by Robert Gavin of the Boston Globe. Gavin looked at the ripple effects, or—if you want to be boring—multipliers, from $77 million in Recovery Act contracts awarded to Reveal Imaging Technologies (RIT), a manufacturer of airport security equipment in Bedford, MA. RIT reports that thanks to the Recovery Act-funded contracts from the Transportation Security Administration, they’ve added nearly 40 jobs over the past year and they’re still hiring.  They’ve expanded their plant capacity, more than doubling the size of their facility. But what Gavin’s article shows is that beyond these direct hiring effects, there’s a lot more upstream and downstream job creation generated by this type of activity.  So far, RIT has subcontracted parts of its Recovery Act projects to 21 other companies in 12 states “that make components or provide services for its advanced scanning machines.” For example, an RIT subcontract helped reduce planned layoffs at a firm that assembles conveyor systems.  Same with a machine tool shop, whose “metal cutting machines, silent several months ago, are humming again” thanks largely to another RIT subcontract. I spoke to the owner of that machine shop, Jack McGrail.  He told me that most of 2009 was pretty dismal and that if things didn’t improve he was going to have to let some folks go.  Then, in November, the RIT order generated by the Recovery Act came in, and, as Jack said, “it saved me from laying two guys off and I was able to add one more.” That’s one type of multiplier effect—the jobs created by firms providing inputs to the final product.  But there’s another type that’s also important: the activity caused when people earn more and go out and spend it.  Gavin picked up this kind of activity too by visiting Rebecca’s Café, a restaurant near RIT that reports a 15% increase in sales since RIT expanded its workforce. The evidence around the RIT case supports something economists have known since Keynes taught it to us: the jobs you directly create through government spending at a time of recession are just the tip of the iceberg.  Thanks to the Recovery Act, there are hundreds of thousands of teachers in classrooms and police on the beat, construction workers fixing roads, weatherizing and rehabbing buildings , engineers building out the smart grid and planning new high-speed rail lines, and much more.  But as with RIT, for each one of these jobs, there are many others helping to supply materials and services to these firms and workers. We’ll be throwing a lot more stones in the water in coming months, and I’ll be sure to keep posted on both the splash and the ripples. Jared Bernstein is Chief Economic Advisor to the Vice President

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Recovery Act in Action, #3: Tracking the Ripples

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Muq’ata Ramallah PRESIDENT ABBAS:  In the name of God the merciful, the compassionate, it is our pleasure to welcome the Vice President, our friend, Joseph Biden, here in Ramallah.  This visit comes as an expression of the interest that President Obama’s administration has according to the peace process and to achieve the two-state solution. The establishment of the Palestinian state and the 1967 borders — the decisions that the Israeli government has announced over the past two days and the establishment and the construction of thousands of new units in the Palestinian territories constitute an undermining of the confidence and all the efforts that were exerted over the past months to launch the indirect negotiations.  The decision to approve these negotiations was taken with great difficulties within the Arab Committee and the leadership entities of the Palestinian people.  And in order to reiterate our intention to support the American efforts to launch the peace process, to revive the peace process, the Israeli resettlement policies and particularly, in Jerusalem, threaten these negotiations and we ask that these decisions are revoked. I reiterate, Mr. Vice President, our commitment to peace as a strategic option, just and comprehensive, a permanent peace on all tracks, including the Syrian and the Lebanese tracks that would lead to ending the Israeli occupation that started in 1967, based on the roadmap plan, including the Arab Peace Initiative.  I would like to address the Israelis’ settling.  The time has come to make peace, peace under a two-state solution — based on the two-state solution, the state of Israel that lives in peace and security alongside the state of Palestine on the borders of the 4th of June 1967 with its capitol East Jerusalem.  And here it is important to speak about the siege that is imposed on Gaza strip that should be lifted in order to provide for the basic needs of our people in Gaza strip in addition to the construction materials that are necessary, because there are 25,000 houses that are in debris and there are hundreds of thousands of Palestinians who live without shelter and need houses.  And, therefore, we ask that the Gaza strip is provided with construction materials. Again, I would like to call out to the Israeli government not to waste this opportunity to make peace.  I call upon this government to stop its settlement policies and to stop imposing fights on the ground and to give the efforts of President Obama’s administration and Representative Mitchell’s efforts the opportunity to succeed.  Thank you, Mr. Vice President. VICE PRESIDENT BIDEN:  Mr. President, thank you very much for your hospitality and for the opportunity to be with you again.  I greatly appreciate the time you’ve given me, you and the Palestinian Authority.  I also had the pleasure of meeting earlier this morning with your Prime Minister Fayyad in — here in Ramallah.  I must say I admire the courage and conviction of the two of you, whom President Obama and I consider willing partners in the quest for a lasting peace in the region. Our administration is fully committed to the Palestinian people and to achieving a Palestinian state that is independent, viable, and contiguous.  Everyone should know — everyone should know by now that there is no viable alternative to a two-state solution, which must be an integral part of any comprehensive peace plan.  The United States considers the goal to be not only in the interest of the Palestinians and the Israelis, but in the United States’ interest as well.  We also believe that the divide between the Israelis and Palestinians can only be resolved by negotiations.  The indirect talks being launched should lead to direct negotiations, which will necessarily reach — which would be necessary to reach an agreement on the permanent status — status issues which you referenced, Mr. President, such as borders, security, refugees, and Jerusalem.  And the United States pledges to play an active as well as a sustained role in these talks.  It’s incumbent on both parties to build an atmosphere of support for negotiations and not to complicate them. Yesterday — yesterday, the decision by the Israeli government to advance planning for new housing units in east Jerusalem undermined that very trust, the trust that we need right now in order to begin as well as produce — have profitable negotiations.  That is why I immediately condemned the action. As we move forward, the United States will hold both sides accountable for any statements or actions that inflame tensions or prejudice the outcome of talks, as this decision did.  The United States strongly supports the Palestinian Authority’s efforts to build as well as strengthen its institutions and develop the economy of a state, including Prime Minister Fayyad’s two-year institution building plan. We must find a way to improve the lives of Gazans, as well.  The Palestinian Authority offers the possibility of a peaceful, independent, and more prosperous future rather than the false promises of extremists.  A historic peace is going to require both the Palestinians as well as the Israelis, as well as their leaders, to be historically bold. And I promise you, Mr. President, the United States will always stand with those who take the risk that peace requires.  Again, Mr. President, I thank you very much for the courage you’ve shown in moving forward.  I thank you for the hospitality you’ve extended to me and my delegation.  And I look forward to seeing you many more times. Thank you. PRESIDENT ABBAS:  Thank you.

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Remarks by Vice President Biden and Palestinian Authority President Mahmoud Abbas

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Jerusalem Tuesday, March 9, 2010  VICE PRESIDENT BIDEN:  I want to thank our hosts for showing us through Yad Vashem.  As a young father, when I introduced each of our sons — who are grown men now — to Europe at age 15, I took them first to Dachau for them to understand as young men the human capacity — ability of mankind to be so brutal.  But also, I took my son here to Israel to let him know that the indomitable spirit of the human being is not able to be snuffed out. What I wrote in the book is as a fan of the Irish poet William Butler Yeats.  Writing about his Ireland, he said, “Too long a suffering makes a stone of the heart.”  What I wrote here is that every day, Israel makes a lie of the poet’s words — ”too long a suffering makes a stone of the heart” — because for world Jewry, Israel is the heart.  For world Jewry, Israel is the light.  For world Jewry, Israel is the hope.  If anyone ever wondered about that, they ought to take the tour of the museum.  They would not doubt it again.  The word — phrase “never again” is used so often it almost has lost its meaning.  But, again, all you have to do is walk through — walk through Yad Vashem and understand how incredible — how incredible the journey has been and the spirit a world Jewry and that Israel is such a central part to its existence. Thank you.

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Remarks by Vice President Biden at Yad Vashem Memorial

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