"If you are neutral in situations of injustice, you have chosen the side of the oppressor. If an elephant has its foot on the tail of a mouse and you say that you are neutral, the mouse will not appreciate your neutrality." --Bishop Desmond Tutu

Tuesday, October 28, 2008

Yo! Stimulate THIS!

In an economic downturn, it's important to know what stimulation proposals work and what don't. So when you hear your favorite conservative championing "capital gains tax cuts", you can refer her to this chart.

This analysis clearly shows that cutting the capital gains tax actually costs money and is therefore a really poor stimulus.
By comparison, other options—such as infrastructure spending, aid to states, food stamps, and unemployment insurance (UI) benefits—are much more cost-effective because they target the needs most likely to channel money back into the economy. Mark Zandi from Moody’s Economy.com estimates that each dollar of refundable tax rebates only boosts GDP by about $1.26, while each dollar of infrastructure spending could provide a $1.59 boost. Not only are many of these stimulus options more effective, but they also have the added benefit of assisting those hardest hit by the downturn and tackling long-standing infrastructure needs that would lower transportation costs, decrease traffic, and increase business productivity.

Zandi’s analysis also shows what doesn’t work as stimulus: a variety of tax breaks for corporations and wealthy individuals, which cost over twice as much as they return to the economy.
If that's socialism, then color me Red and call me "Comrade!" I'm for what works.

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