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Good news about economic stimuli

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I’ve posted a few excerpts about how slow and ineffective tax cuts are as an economic stimulus. But (as the saying goes) any jackass can kick a building down.  What does work?

Beyond the partisan rhetoric, there’s good news.  Here are excerpts from an interview with Mark Zandi, economist with Moody’s

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Moody’s study suggests extending unemployment benefits, increasing food stamps fastest ways to stimulate economy.

Lower Wall Street from Under the FDR
Lower Wall Street; Image by SheepGuardingLlama via Flickr

The industry research firm Moody’s tracked the potential impact of each stimulus dollar, looking at tax rebates, tax incentives for business, food stamps and expanding unemployment benefits. […]

The report found that “some provide a lot of bang for the buck to the economy. Others … don’t,” said economist Mark Zandi. […]

In findings echoed by other economists and studies, he said the study shows the fastest way to infuse money into the economy is through expanding the food-stamp program. For every dollar spent on that program $1.73 is generated throughout the economy, he said. […]

“If someone who is literally living paycheck to paycheck gets an extra dollar, it’s very likely that they will spend that dollar immediately on whatever they need – groceries, to pay the telephone bill, to pay the electric bill,” he said. […]

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Food stamps. Direct aid to people short on food. Unemployment benefits. And why? Because it will most likely be spent on practical, immediate needs. The kinds of things that we want to be producing.

Now there’s a nexus of moral and economic responsibility than anybody ought to be able to back!

It may be late in the game to impact the first stimulus bill. But hang on to this idea: in all likelihood, this is a recession of several years’ duration, and this is not the last time economic stimuli will be on the table.

Here’s the moral of the story:

Food stamps and unemployment benefits are not only good for people who are struggling. They’re good for the entire economy. They’re good for all of us.

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Written by Monte

February 13, 2009 at 12:57 pm

Paralyzed by Iraq, America withers

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The Great Society speechName a great domestic accomplishment of the USA in the last five years.

Uh …

Right. Instead, consider this challenging op-ed by Bob Herbert at the NYT (I suggest you read it here):

Despite the sustained expansion of the past few years, the middle class — for the first time on record — failed to grow with the economy. […]

Other nations can provide health care for everyone. The United States cannot. In an era in which a college degree is becoming a prerequisite for a middle-class quality of life, we are having big trouble getting our kids through high school. And despite being the wealthiest of all nations, nearly 10 percent of Americans are resorting to food stamps to maintain an adequate diet, and 4 in every 10 American children are growing up in families that are poor or near-poor. Read the rest of this entry »

Written by Monte

April 12, 2008 at 2:22 pm

Posted in Politics, Terrorism