Daily Archives: February 11, 2010
You may recall that I questioned the efficacy of Paul Rosenberg, et al.’s argument that increasing food stamp benefits would directly lead to an increase of 9 to 10 million more people being employed:
Without arguing the statistical or modeling specifics behind the chart, there is one glaring item that reveals how much magical thinking went into its creation. By far the most “stimulating” actions set forth are “Temporary Increase in Food Stamps”(calculated to create 9,803,333 jobs), “Extending Unemployment Insurance” (9,236,667 jobs), and “Increased infrastructure Spending” (9,010,000 jobs). The closest tax-cutting measure, according to this analysis, in job creation is a “Payroll Tax Holiday” which is estimated to create 7,253,333 jobs. Do you see the problem?
How, exactly, do food stamps and unemployment benefits create jobs? Arguably, spending on infrastructure could create construction jobs on a temporary basis, although that hasn’t proven to be the case with the stimulus bill that was passed. But there is simply no logic to the idea that providing government benefits to the poor and unemployed will serve to create jobs, much less 9 to 10 million of them. That’s just magical thinking.
Whatever the virtues of income support, and even if that support will be quickly spent in the economy, there is no justification for concluding that it will expand the economy. At best, it can stabilize a downturn by maintaining some level of consumer spending. But that does not expand the economy in any way, shape or form, and it certainly doesn’t create jobs [at] an unprecedented level as suggested by Rosenberg.
As it turns out, we have plenty of empirical evidence to show that, in fact, increasing food stamp aid does nothing to increase employment. Indeed, for the past decade, the US has dramatically increased the number of participants who receive food stamps to the point that 1 in every 8 Americans now partakes in the program:
States eased limits on people with cars and required fewer office visits from people with jobs. The federal government now gives bonuses to states that enroll the most eligible people.
A self-reinforcing cycle kicked in: outreach attracted more workers, and workers built support for outreach. In a given month, nearly 90 percent of food stamp recipients still have incomes below the federal poverty line, according to the Department of Agriculture. But among families with children, the share working rose to 47 percent in 2008, from 26 percent in the mid-1990s, and the share getting cash welfare fell by two-thirds.
Whether this is a good policy or not is neither here nor there. Instead, what should be glaringly evident is that there is no correlation between food stamp distribution and job creation. Over the past decade, as the number of people using food stamps rose from around 17 million to almost 35 million, the economy has both created and shed millions of jobs. For example, since December 2007, when the recession officially began, the economy lost 8.4 million jobs according to the Labor Department. Yet in that same time, according to the chart above, around 7 million more people received food stamps (rising from about 27 million to 34 million). If the “food stamps = job creation” were correct, how did we lose all of those jobs?
The inescapable conclusion is that food stamps do not create jobs, and at best only serve to keep some minimal level of economic activity going during down times.
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That isn’t particularly surprising since we recently cited a Gallup poll saying the number was 75%. Suffice it to say the vast majority of the country doesn’t like how the federal government is doing its job.
What’s even more fascinating though is how CNN chooses to report that:
But the ABC News/Washington Post survey, released Thursday morning, suggests a partisan divide, with 8 out of ten conservative Republicans viewing how the federal government works in a negative way, but nearly 6 out of ten liberal Democrats saying they were enthusiastic or satisfied.
The 67 percent dissatisfaction level is the highest in ABC News/Washington post polling since it peaked at 70 percent in March 1996, in the months after the a federal government shutdown led by Republicans.
So which political party gets blamed for this dissatisfaction? A recent CNN/Opinion Research Corporation poll indicated that nearly half the public said they were angry at both political parties, with 11 percent angry only at the Republicans and 9 percent angry only at the Democrats.
So assuming, given the first paragraph, that “conservative Republicans” and “liberal Democrats” cancel each other out, what is the source of all this dissatisfaction? Well never mentioned are the independents. Obviously this number is being driven primarily by the dissatisfaction of independents who, as any political neophyte knows, are the key to elections.
And I’m sure there are a number of politicians out there who will misinterpret the part which says only “11 percent angry only at the Republicans and 9 percent angry only at the Democrats.” That’s not good news for either party – they don’t like any of you. See again “Tea Party”. Understand they are only the tip of the iceberg the good ship USS Congress is blithely approaching at full speed.
For the CNN poll, these are the highest dissatisfaction numbers since 1996 when they peaked at 70%.
This is another in a long line of polls which seems to be pointing to a very interesting midterm election season. It’s not going to be exclusively a “throw the Democrats out”. I think we’re going to see more of a “throw the incumbents” out. And I think the driving issue for most of the public – you know the teabagging, unwashed, clueless electorate – is fiscal sanity. They just aren’t seeing it, and they want it and they want it now.
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Wow. This just takes, well, you name it. From Katherine Jean Lopez at The Corner:
Joe Biden told Larry King last night: “I am very optimistic about — about Iraq. I mean, this could be one of the great achievements of this administration.”
That is just freakin’ breathtaking in its audacity. More here.
I guess Iraq wasn’t Bush’s fault. Instead it’s Obama’s triumph?
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Yes, another in a long line of spending bills which has a purported purpose it won’t accomplish. What it will accomplish is an increase in the debt.
None other than Nancy Pelosi is troubled by the fact that it appears the proposed “jobs” bill being rushed through Congress doesn’t create, uh, jobs.
The White House session with congressional leaders was supposed to be a step toward bipartisanship, with a focus on jobs. But Pelosi made it clear that there’s disagreement, even among Democrats.
White House economic advisers Christina Romer and Larry Summers defended the administration’s proposal to give employers a $5,000 credit for each new worker they hire as well as help with Social Security taxes.
Pelosi countered that no one she’s consulted believes that the plan will actually lead to the creation of new jobs, sources said.
“She questioned the efficacy of it,” one Democratic aide said.
For once, Pelosi is right – any jobs created will be at the margins. In fact, the centerpiece of the “jobs” bill is – wait for it – and extension of unemployment benefits.
And, of course, you remember the big “we’re concerned about the deficit” announcement not long ago where Congressional Democrats again said they were instituting PAYGO (a means of forcing Congress to pay for new spending by cutting the budget elsewhere or raising taxes) as a means of controlling it? Yeah, except for this boondoggle. Here’s from the last page of the draft bill:
(a) IN GENERAL.–One-half of the amounts in each of titles V and VI are designated as an emergency requirement pursuant to section 4(g) of the Statutory Pay-As-You-Go Act of 2010, and designated as an emergency requirement pursuant to section 403(a) of S. Con. Res. 13 (111th Congress), the concurrent resolution on the budget for fiscal year 2010.
In case you’re wondering what titles V and VI are, Jamie Dupree fills us in:
Title V of the jobs bill deals with expiring tax credits and tax breaks known as “tax extenders” – which Congress constantly renews every year or two, always resisting talk of making them permanent.
Those provisions are said to be worth about $33 billion, so one half of that would go to the deficit.
Title VI of the draft bill centers around extended jobless benefits and extra health (COBRA) provisions for the unemployed. That’s another big chunk of money.
The estimated total for the bill is $104 billion with little if anything in it which will actually create jobs.
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