If your business provides goods or services, you should call your Senators and Congressman and demand they extend unemployment insurance. The economy's fundamental problem is a "demand deficit." There is less economic demand for products and services than the ability we have to produce them. Every dollar of spending on unemployment benefits increases overall economic growth by $1.61. That's because people who get unemployment benefits need to spend the money, and the people who receive it from them spend it as well, and so on. Tax cuts for the wealthy return $0.34 for every dollar spent or not collected as revenue.
IF you run your business based on your taxes, then you are not a smart businessman. You will expand or contract based on the market, NOT on if your taxes go up 3.6%.
Yet another chucklehead who believes in the "multiplier effect." Newsflash: The multiplier of gov't spending is less than one. Unemployment has to be paid for by taxes, which put a drag on the economy and on businesses.
This has been demonstrated many times. If what you said were true, everyone ought to go on unemployment and we could watch GDP soar.
"Not all budgetary dollars are created equal," said Alan Blinder, professor and co-director of Princeton University's Center for Economic Policy Studies, in a conference Wednesday morning. "Some have a lot of bang for the buck, and some have very little. The GDP increase per dollar of budgetary cost is in the range of 1.6, 1.7 for things like food stamps and unemployment benefits, and in the range of .35 for extending the Bush tax cuts. We could get some substantial job creation by simply reprogramming the $75 billion that would be saved over the next two years by not extending the upper-bracket Bush tax cuts and spending it instead on unemployment benefits, food stamps, and the like."
Blinder's economic advice supports the tax policy of President Obama and the Democrats, who would like to maintain tax cuts for 95 percent of Americans, while letting the cuts for those with incomes above $250,000 expire. Letting the tax cuts lapse is projected to trim approximately $675 billion from the deficit over 10 years, according to the Center for Budget and Policy Priorities.
The GOP, by contrast, is aiming to extend the Bush tax cuts across the board, and has tried to block the billions in deficit spending to extend benefits to the long-term unemployed.
Blinder said that extending tax cuts for the wealthiest Americans would only exacerbate an ever-increasing income gap.
"One of the objections a lot of us raised back in 2001 when the Bush cuts were originally enacted was that they were...adding further post-tax income inequality to an economy that was already producing a lot of pre-tax inequality," he said. "I still feel that way. On the other hand, unemployment benefits and food stamps tend to go to people with much much lower incomes [who] need it a lot more, and you get substantially more GDP boost and job creation than if the same amount of money were spent extending tax cuts at the top."
After the U.S. has dug itself out of this recession, Blinder said, Congress should then make it a priority to start digging the country out of debt.
Alan Stuart Blinder (born October 14, 1945) is an American economist. He serves at Princeton University as the Gordon S. Rentschler Memorial Professor of Economics and Public Affairs in the Economics Department, and as co-director of Princetons Center for Economic Policy Studies, which he founded in 1990. Since 1978 he has been a Research Associate of the National Bureau of Economic Research. He is among the most influential economists in the world according to IDEAS/RePEc.
Tax Returns: A Comprehensive Assessment of the Bush Administration's Record on Cutting Taxes; Center on Budget and Policy Priorities