Ask any macro­econ­o­mist what the most impor­tant role of the gov­ern­ment is, and they will answer, ​‘match­ing aggre­gate sup­ply and demand.’ From an eco­nom­ic per­spec­tive, fed­er­al fis­cal pol­i­cy is sim­ply a tool that helps us make sure the Unit­ed States has the $16 tril­lion in pur­chas­ing pow­er to buy the $16 tril­lion in goods and ser­vices that we, as a coun­try, can pro­duce each year.

Our federal government has thrown huge amounts of cash in all directions, in the vain hope that some of it might trickle down to the average American.

So why are we so bad at this?

It is now six years since the Great Reces­sion, and employ­ment num­bers are still dis­mal. In every oth­er reces­sion since World War II, employ­ment bounced back in four years or less. Why hasn’t that hap­pened this time? Because a large gap exists between the country’s pro­duc­tive poten­tial — what we could pro­duce if all of those unem­ployed peo­ple were work­ing — and the aggre­gate demand for goods and services.

In 2009, there was enor­mous right-wing wail­ing and gnash­ing of teeth over the fact that the Amer­i­can Recov­ery and Rein­vest­ment Act (ARRA) doled out some $800 bil­lion, with near­ly half going to infra­struc­ture, edu­ca­tion, health­care and renew­able ener­gy projects. But in ret­ro­spect, that wasn’t enough. The U.S. econ­o­my was in car­diac arrest. It need­ed a defib­ril­la­tor shock. Instead, it got a cher­ry Life Saver.

Admit­ted­ly, $800 bil­lion is a lot of mon­ey. If well spent, it ought to be able to solve almost any prob­lem. Try this math, for instance: There are cur­rent­ly 11 mil­lion unem­ployed Amer­i­cans. A job at the min­i­mum wage would cost $15,000 each year, for each one. That means that $165 bil­lion, spent that way, would elim­i­nate unem­ploy­ment in the Unit­ed States for a year.

If we want­ed to be less miser­ly, we could pay each unem­ployed Amer­i­can $10 an hour, which adds up to a salary of $20,000 a year. That would cost, in total, $220 bil­lion. That’s just one- fourth the cost of the ARRA — and lit­tle more than one-third of the annu­al mil­i­tary bud­get. That’s right: For the cost of one-third of the mil­i­tary bud­get, the Unit­ed States could have full employment.

What would all those new hires do? Back in 1936, British econ­o­mist John May­nard Keynes sug­gest­ed this to solve woes about joblessness:

If the Trea­sury were to fill old bot­tles with ban­knotes, bury them at suit­able depths in dis­used coalmines which are then filled up to the sur­face with town rub­bish, and leave it to pri­vate enter­prise on well-tried prin­ci­ples of lais­sez-faire to dig the notes up again (the right to do so being obtained, of course, by ten­der­ing for leas­es of the note- bear­ing ter­ri­to­ry), there need be no more unemployment.

Mon­e­tarist econ­o­mist Mil­ton Fried­man made a sim­i­lar obser­va­tion: that price defla­tion could be pre­vent­ed by drop­ping mon­ey out of a helicopter.

On a more seri­ous note, the Emer­gency Jobs Act (H.R. 1617) pro­posed by Rep­re­sen­ta­tive Jan Schakowsky (D- Ill.) would put peo­ple to work build­ing and fix­ing schools, main­tain­ing parks, pro­vid­ing health­care, teach­ing, pro­vid­ing child care and reha­bil­i­tat­ing hous­ing. In its ​“Bet­ter Off Bud­get” released this month (see page 30), the Con­gres­sion­al Pro­gres­sive Cau­cus pro­posed cre­at­ing an infra­struc­ture bank to update our aging infra­struc­ture and put Amer­i­cans back to work.

Are ini­tia­tives like these pos­si­ble? Of course. It has already been done. Dur­ing Franklin D. Roosevelt’s admin­is­tra­tion, the Civ­il Works Admin­is­tra­tion hired four mil­lion unem­ployed work­ers in two months to build roads, schools, priv­ies and playgrounds.

Instead, our fed­er­al gov­ern­ment has thrown huge amounts of cash in all direc­tions, in the vain hope that some of it might trick­le down to the aver­age Amer­i­can. The fun­da­men­tal prob­lem with that approach is that not all gov­ern­ment spend­ing is cre­at­ed equal.

Moody’s Chief Econ­o­mist Mark Zan­di detailed the dif­fer­ences in con­gres­sion­al tes­ti­mo­ny. He not­ed that every dol­lar in infra­struc­ture spend­ing adds $1.59 to aggre­gate demand. After all, you have to hire Amer­i­cans to build that infra­struc­ture. That work­er then spends mon­ey on rent; his land­lord spends that mon­ey in a restau­rant; her short-order cook spends that mon­ey in a bar­ber shop, and so on. Spend a dol­lar to build a school, and you get your dol­lar back in aggre­gate demand, plus a 59-cent bonus — and when you’re done, you have a school, too.

Unem­ploy­ment insur­ance and food stamps boost aggre­gate demand to an even greater degree by direct­ly giv­ing Amer­i­cans the means to pur­chase prod­ucts; unfor­tu­nate­ly, nei­ther form of aid actu­al­ly employs the recip­i­ents or results in long-last­ing, tan­gi­ble pub­lic invest­ments such as roads or hos­pi­tals. Still, though, it’s fund­ing that goes back into the Amer­i­can economy.

By con­trast, every dol­lar in cor­po­rate tax breaks adds only 30 cents to aggre­gate demand. Most, if not all, of that 30 cents goes to share­hold­ers rather than U.S. goods and ser­vices or U.S. jobs. (So much for the myth of the ​“job cre­ators.”) Spend a dol­lar on cor­po­rate tax breaks, and 70 cents of that dol­lar lines the pock­ets of corporations.

Accord­ing to the Gov­ern­ment Account­abil­i­ty Office, cor­po­ra­tions enjoyed $180 bil­lion in cor­po­rate tax breaks in 2011, a num­ber that actu­al­ly exceed­ed cor­po­rate tax rev­enue. By using Zandi’s cal­cu­la­tions, if the gov­ern­ment had instead spent the same amount of mon­ey on infra­struc­ture, that spend­ing would have increased aggre­gate demand by approx­i­mate­ly a quar­ter of a tril­lion dollars.

Or con­sid­er mil­i­tary spend­ing. Most stud­ies of mil­i­tary spend­ing sug­gest that every dol­lar spent on the mil­i­tary increas­es aggre­gate demand by only 60 cents. The war in Iraq took 9.5 per­cent of our annu­al nation­al net worth and dropped it into the sands of Mesopotamia. U.S. mil­i­tary spend­ing peaked at more than $700 bil­lion in 2010 dur­ing the wars in Iraq and Afghanistan. Though the sequester is bring­ing that num­ber down to $500 bil­lion, the entire $200 bil­lion annu­al dif­fer­ence has been used for deficit reduc­tion—which, again, actu­al­ly reduces aggre­gate demand by cut­ting gov­ern­ment spending.

Or there’s the mat­ter of quan­ti­ta­tive eas­ing. The Fed­er­al Reserve has been mon­e­tiz­ing gov­ern­ment and mort­gage debt to the tune of as much as $1 tril­lion a year for sev­er­al years now. A dol­lar ​“cre­at­ed” by the Fed and used to buy gov­ern­ment debt and mort­gage debt appears to have even less effect than a dol­lar bor­rowed and ​“spent” by the Trea­sury on cor­po­rate tax breaks. If the Fed had tak­en the same $3 tril­lion expend­ed on quan­ti­ta­tive eas­ing over the past five years and used it instead to fund infra­struc­ture projects across the nation, then that would have added approx­i­mate­ly $1 tril­lion a year to GDP and reduced unem­ploy­ment to a lev­el very close to zero (which is, in fact, the Fed’s legal respon­si­bil­i­ty, togeth­er with price stability).

The Amer­i­can econ­o­my has enor­mous struc­tur­al prob­lems. We have run a trade deficit of at least $350 bil­lion every year since 2000. Because we are the only indus­tri­al­ized coun­try with­out uni­ver­sal health­care, many peo­ple who should be in the Amer­i­can labor force are too sick to work, our pro­duc­tiv­i­ty is low­er than it ought to be and our life expectan­cy is sub­stan­tial­ly short­er. We have the fifth-most unequal dis­tri­b­u­tion of wealth in the entire world, and the rich spend a minus­cule pro­por­tion of their income on U.S. goods and services.

And despite that, all that stands between us and a healthy econ­o­my with full employ­ment is a few tweaks in fed­er­al spend­ing pol­i­cy. Spend more on the things that boost aggre­gate demand. Spend less on the things that don’t.

What are we wait­ing for?