Chart of the Day, November 16, 2011

From the CBO's Director's Blog:
  • Policies that would reduce the marginal cost of adding employees or would be targeted toward people who would be most likely to spend the additional income would have the largest effects on output and employment. Those policies include reducing employers' payroll taxes and providing aid to the unemployed.
  • Policies that would give little incentive for firms to hire or invest—such as reducing business income taxes and reducing tax rates on repatriated foreign earnings - would have small effects.
  • Achieving both short-term stimulus and long-term sustainability would require a combination of policies: changes in taxes and spending that would widen the deficit now but reduce it later in the decade.

We leave determining which policy options are advocated by which political parties as an exercise for the reader.


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