Politics is so tiring. The same old talking points every day. Wouldn’t it be nice if someone in Congress would give us a non-partisan objective view of our options? Oh, wait! The Congressional Budget Office does just that! Recent testimony by the CBO director tells us (yet again) what CBO has been telling us: that extending unemployment benefits produces more output and better increase in employment per dollar spent than any other option. Looking for a document (or an agency) to feature on your blog or GovInfo home page? Here you go!
- Policies for Increasing Economic Growth and Employment in 2012 and 2013, Statement of Douglas W. Elmendorf, Director Congressional Budget Office, before the Committee on the Budget United States Senate, Congressional Budget Office (November 15, 2011) [54 pages, PDF].
Comparing the estimated effects of different policy actions shows the following:
- Policies that would have the largest effects on output and employment per dollar of budgetary cost in 2012 and 2013 are ones that would reduce the marginal cost to businesses of adding employees or that would be targeted toward people who would be most likely to spend the additional income. Such policies include reducing employers’ payroll taxes (especially if limited to firms that increase their payroll), increasing aid to the unemployed, and providing additional refundable tax credits in 2012 for lower- and middle-income households.
- Policies that would primarily affect businesses’ cash flow but would have little impact on their marginal incentives to hire or invest would have only small effects. Such policies include reducing business income taxes and reducing tax rates on repatriated foreign earnings.