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Friday, December 10, 2010

"Supply-Side Economics: Tea Party Style"

Pro-Growth Liberal takes is puzzled by Michele Bachmann's complaint that extending unemployment insurance will increase the deficit:

Supply-side Economics: Tea Party Style: Andrew Leonard covers the opposition to the Obama-McConnell tax deal coming from Tea Party star Michele Bachmann. I’m tempted to say that her comments make me feel 30 years younger... After all, 30 years ago we were mocking supply-siders and their Laugher Curve. Andrew notes:

And as for what the country can afford? The total cost of the tax cut package unveiled yesterday, counting the extension of all the Bush tax cuts, the new payroll tax cut, the unemployment benefit extension and the reinstated (at a historically low level) estate tax comes to around $800 billion-$900 billion over the next two years. The cost of extending unemployment benefits for 13 months is about $60 billion. If your worry is "massive spending" then there are more appropriate places to direct your ire than unemployment benefits ... we should looking very closely at which tax cuts or social welfare policies are most likely to give us the biggest bang for the buck, in terms of encouraging economic growth. And on that score, spending money on unemployment benefits gets a very high rating. Extending unemployment benefits is a sensible move for a government when it is stretched for funds when economic growth is slow and the goal is to increase demand.

In Michele Bachmann’s world – is $60 billion much larger than $800 billion? Or does she really believe reducing taxes does not add to the deficit? The latter seems to be the world Art Laffer lives in. ...

While Tea Party types say they’d like to reduce unemployment, they oppose even modest increases in government spending. And while they say they abhor deficits, they want large tax cuts with little bang for the buck. Go figure!

    Posted by on Friday, December 10, 2010 at 12:06 AM in Economics, Politics, Social Insurance, Unemployment | Permalink  Comments (38)


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