Good news about economic stimuli

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 Economy.com:

clipped from money.cnn.com Moody’s study suggests extending unemployment benefits, increasing food stamps fastest ways to stimulate economy. Lower Wall Street; Image by SheepGuardingLlama via Flickr The industry research firm Moody’s Economy.com 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. […]

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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Tags: stimulus, food+stamps, unemployment+benefits, Moody’s+Economy, Moody’s, fastest+stimulus, poverty, Monte Asbury

Bush recession different in size and substance

This recession is not only more serious than others of recent memory, but it affects different parts of the economy than previous ones have.  A couple of graphs show the former, and a few sentences, the latter:

clipped from www.dailykos.com For the first time ever, more private-sector services [industry] jobs have been lost than goods-producing [manufacturing] jobs have been lost. Many of those lost jobs were in retailing, which has seen its largest job losses since the data collection began in 1939 Some economists say many of those jobs will never come back as Americans wean themselves from the easy credit that’s fueled their consumption for the past 25 years. “A lot of them are gone for good,” said Nigel Gault, chief U.S. economist for IHS Global Insight, a major economic consulting firm. “The age of the U.S. and world economy being driven by the U.S. consumer may be in the past.”

UPDATE:  This morning, GM announced layoffs of an additional 10,000 workers.

The President’s stimulus plan is, doubtless, far from perfect.  But it has the support of the most brilliant economists we have, including the Nobel laureate Robert Krugman (whose chief concern is that it is far too small).  Investing in the economy has the potential for paying the government back manyfold, even above the cost of borrowing.

And another ten thousand people will be bringing bad news home to their families.

Seems foolish to delay.

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Tags: recession, job+loss+graph, recession+different, Bush+recession, stimulus, Krugman, Monte Asbury

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TheOnion: What is the $700B being spent on?

From America’s finest news source:

clipped from www.theonion.com