Wednesday, December 01, 2010

CBO: Tax Cuts Were Least Effective Stimulus in Recovery Act


According to a new report from the Congressional Budget Office, the tax breaks provided by the Recovery Act did less to stimulate our economy than government spending, purchasing and transfer payments. You can find the summary of the CBO's report below (Estimated Impact of the American Recovery and Reinvestment Act on Employment and Economic Output From July 2010 Through September 2010P, or download the full PDF here courtesy of the TaxProf Blog.

Center on Budget and Policy Priorities, New CBO Report Finds up to 3.6 Million People Owe Their Jobs to the Recovery Act:

Among ARRA’s most effective provisions for saving and creating jobs, according to CBO’s estimates, are direct purchases of goods and services by the federal government, transfer payments to states (such as extra Medicaid funding), and transfer payments to individuals (such as increased food stamp benefits and additional weeks of unemployment benefits). CBO’s estimates indicate that tax cuts are less effective job producers, and tax cuts for higher-income people and corporations have very low bang for the buck.

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