Bang for the buck

BANG FOR THE BUCK…. The Congressional Budget Office analyzed the stimulus package and found that the recovery efforts created as many as 1.6 million jobs, and raised the GDP by as many as 3.2 percentage points. But the CBO also took a closer look at what parts of the stimulus were the most effective.

Ezra Klein posted the chart, and noted the results:

Leading the list is direct spending by the federal government, infrastructure aid to states and localities, other types of aid to states and localities, and transfer payments (think unemployment insurance and food stamps) to individuals. At the bottom of the list are corporate tax cuts, the new homeowner’s tax credit and individual tax cuts.

Right. All of the various elements of the stimulus package did at least some good. In terms of returns on the dollar — the proverbial bang for the buck — government spending and aid to states did far better than cutting taxes.

This is entirely consistent with the evidence we saw before the vote on the recovery bill, so let’s not forget what happened — Republicans and conservative Dems scaled back infrastructure spending and aid to states, but kept the tax cuts.

And going forward, any additional recovery efforts will feature the exact same arguments, with the right insisting that government spending is ineffective compared to tax cuts — reality be damned.