Focus on Stimulus

Focus on Stimulus

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On December 9, Morgan Stanley economists Richard Berner and David Greenlaw estimated that the tax deal will raise growth in 2011 but reduce it in 2012.

In a December 8 analysis, economist Mark Zandi praised the stimulus package announced by the White House and congressional Republicans. He has now raised his real GDP forecast for next year to 4 percent and expects 2.6 million jobs to be created in 2011, which will reduce the unemployment rate by more than a percentage point.

On December 7, Macroeconomic Advisers estimated that the stimulus deal will boost real GDP growth in 2011 above 4 percent. It had previously estimated that growth would be 3.7 percent next year.

On December 3, Morgan Stanley economist David Greenlaw posted an analysis of extended unemployment benefits. He estimates that GDP growth will be one percentage point lower in the first quarter of 2011 if benefits are allowed to expire.

On December 2, the Council of Economic Advisers issued a report on the economic impact of extended unemployment benefits. It finds that by supporting households that would otherwise be forced to cut back on their spending, unemployment benefits stimulate national economic growth and lower unemployment rates.

In a November 30 speech, Federal Reserve Bank of Minneapolis president Narayana Kocherlakota discussed the ways in which monetary and fiscal stimulus mirror each other.

In a November 29 report, the Congressional Budget Office estimated that the net cost to taxpayers of the Troubled Asset Relief Program (TARP) would be just $25 billion, down from an estimate of $66 billion in August and $109 billion in March. The original cost was estimated at $700 billion when enacted by the George W. Bush administration. Nevertheless, TARP is routinely attacked by Republicans as a vast give-away program.

I last posted items on this topic on November 29.

Bruce Bartlett is an American historian and columnist who focuses on the intersection between politics and economics. He  blogs daily and writes a weekly column at The Fiscal Times. Bartlett has written for Forbes Magazine and Creators Syndicate, and his work is informed by many years in government, including as a senior policy analyst in the Reagan White House. He is the author of seven books including the New York Times best-seller, Impostor: How George W. Bush Bankrupted America and Betrayed the Reagan Legacy (Doubleday, 2006).

Bruce Bartlett’s columns focus on the intersection of politics and economics. The author of seven books, he worked in government for many years and was senior policy analyst in the Reagan White House.