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Sunday, August 22, 2010

$1.00 in UI Benefits = $1.61 in GDP

Mark Zandi, the Chief Economist at Moody's Analytics, testified before the Senate Finance Committee in April of this year.

The data he presented is well worth remembering in light of the Americans Want to Work Act.

The critical piece of data: each dollar of unemployment insurance benefits paid turns into $1.61 of GDP in one year's time. Returns on investment as high as that are hard to come by.

I've added the table below to the Stat Pack page.

Economic Category/Activity GDP Growth
Tax Cuts
Nonrefundable Lump-Sum Tax Rebate 1.01
Refundable Lump-Sum Tax Rebate 1.22
Temporary Tax Cuts
Payroll Tax Holiday 1.24
Job Tax Credit 1.30
Across-the-Board Tax Cut 1.02
Accelerated Depreciation 0.25
Loss Carryback 0.22
Housing Tax Credit 0.90
Permanent Tax Cuts
Extend Alternative Minimum Tax Patch 0.51
Make Bush Income Tax Cuts Permanent 0.32
Make Dividend and Capital Gains Tax Cuts Permanent 0.37
Cut in Corporate Tax Rate 0.32
Spending Increases
Extending Unemployment Insurance Benefits 1.61
Temporary Federal Financing of Work-Share Programs 1.69
Temporary Increase in Food Stamps 1.74
General Aid to State Governments 1.41
Increased Infrastructure Spending 1.57
Low-Income Home Energy Assistance Program (LIHEAP) 1.13
Notes
1. The bang for the buck is estimated by the one-year dollar change in GDP for a given dollar reduction in federal tax revenue or increase in spending.
2. The bang-for-the-buck estimates are based on simulations of the Moody’s Analytics econometric model of the U.S. economy.
3. Source: Moody's Economy.com PDF link

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