Stimulus Scenarios: Size, Composition, & Jobs (6 stimulus scenarios & their job creation potential)

[Are_grits_groceries]

1) The Obama stimulus

Spending 58% of $400 billion = $232 billion
Tax cuts 42% $400 billion = $168 billion

Stimulus effect Spending = $232 billion x 1.4 = $324.8 billion
Stimulus effect Tax cuts = $168 billion x .4 = $67.2 billion

Overall stimulus effect = $394 billion

Assumption: $140,000 of stimulative effect per job

Overall stimulus effect on jobs = $394 billion/140,000 = 2.81 million jobs

________________________________________________________________________

2) The Obama stimulus Best Case

Assume tax cuts have a much higher stimulative effect of 1 rather than .4

Best case Stimulus effect Tax cuts = $168 billion x 1 = $168 billion
Best case Overall stimulus effect = $168 billion + $324.8 billion = $492.8 billion
Best case scenario on jobs = $492.8 billion/140,000 = 3.52 million jobs

Notes: This best case tax cut scenario is unlikely. The $160 billion Bush tax rebate had an estimated stimulative value of .3 or $48 billion. Many people saved or paid down debt with it. Conditions have worsened considerably since then and so even more people may use tax cuts this way, lessening their stimulative effects. This scenario brings us back only to near pre-recession levels and remember even at that point Bush's job creation numbers were very poor.

http://oxdown.firedoglake.com/diary/3522

Check out the other 4 scenarios. Somebody ought to be sending this out in every form possible.

[librechik]

1. here is the "effects of stimulus per dollar" chart from Moody's

http://endtheecho.wordpress.com/2008/01/25/moodys-on-economic-stimulus-package/




Why are we not issuing every family $100 a week per person food stamps?

[Oregone]

2. Awesome example of why I think this stimulus, as is, sucks

Not only are tax cuts ineffective at generating stimulus (since its spent on debt, porn, Wal-mart, etc), they create more unneeded debt. Its not popular, but now I would be raising taxes on everyone (but the rich more) to fund a stimulus directed at infrastructure, redeemable entitlements, and the housing industry. For every $100 billion more in taxes raised, you can inject $1.4 to $1.7 billion of capital into the economy. For every $100 billion cut, you create $100 billion more of deficit, and only inject $.4 to $1.2 billion into the economy (based on the types of cuts).

This whole thing is a nightmare. Its like we are in Bizzaro land.