Job guarantees would be matched by increased tax collections---reduces inflationary pressures and is widely perceived by the public.

If the JG programme was funded entirely by means of deficit spending, the economy’s job gap would fall continuously as the JG programme grew, because programme expenditures would increase private sector employment at the same time it was creating JG programme jobs. The number of jobs the JG programme would have to create to achieve full employment would therefore be determined by the point where the JG employment curve crossed the job gap curve. Based on Figure 1, the JG programme would achieve full employment by creating A jobs with an accompanying increase in deficit spending of B dollars. It could be, though, that the JG programme would have to maintain a labour force larger than A in order to perform its buffer stock function adequately. Figure 2 portrays this situation. Assume that C is the minimum level of employment the JG programme must maintain in order to perform its buffer stock function adequately. To maintain the programme at that size, total programme spending would have to equal E dollars, of which D dollars would represent additional deficit spending. The balance of the spending required to fund the programme (DE) could be matched by increased tax collections. The purpose of this tax increase would not be to ‘pay’ for the programme (even though people probably would think of the tax increase in those terms) but simply to limit the growth of aggregate demand that programme expenditures otherwise would cause. Comparing C to A and E to B shows that the programme would be larger in this instance (to adequately perform its buffer stock function) and would cost correspondingly more than if the programme were funded entirely with deficit spending. Finally, Figure 3 shows the level of funding and JG employment required if JG programme spending was fully matched by increased tax collections. In that case the job gap that existed before the establishment of the programme would be filled entirely with JG programme employment, creating a programme of F employment at a cost of G. This is not the option Post Keynesian JG advocates prefer, since they believe additional deficit spending could be undertaken in connection with the operation of a JG programme without untoward inflationary effects in most circumstances. Nevertheless, their analytical model allows for this option; and in some situations (e.g., when inflation rates already were rising) they might advocate the tax policy portrayed in Figure 3 in order to maximise the JG programme’s anti-inflationary effect (by taking advantage of the programme’s buffer-stock effect without causing any counteracting increase in aggregate demand).