Tuesday, January 27, 2009

More evidence that tax cuts are better than stimulus

Greg Mankiw provides this stimulus lag analysis from the CBO for the 2008 stimulus:
2009: 29.0
2010: 115.8
2011: 105.5
2012: 53.6
2013: 26.5
2014: 13.0
2015: 6.9
2016: 3.0
2017: 1.6
2018: 0.9
2019:0.4

Total: $356.0 billion

So only 8 percent of this spending occurs in budget year 2009, and only 41 percent occurs in first two years.

And Thomas Sowell says:
Using long, drawn-out processes to put money into circulation to meet an emergency is like mailing a letter to the fire department to tell them that your house is on fire.

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