‘INJECTING DEMAND INTO THE ECONOMY’ IS A GOOD IDEA…. House Speaker Nancy Pelosi spoke to reporters on Thursday, and stressed the importance of extended unemployment insurance. It’s not only vital to offering some relief to the jobless, the Speaker said, but also serve as “one of the biggest stimuluses to our economy.” Unemployment benefits are “spent quickly” and that money “injects demand into the economy,” she explained, making the investment “job creating.”
The right seemed to find this ridiculous. High-profile right-wing bloggers characterized the remarks as “laughable” and “lunacy.” A Fox & Friends co-host said she didn’t understand the “logic” of the argument. The publisher of the conservative Las Vegas Review-Journal said anyone with “half a brain” would disagree with Pelosi.
The intensity of the right’s response is matched only by how terribly wrong conservatives are.
Mark Zandi, chief economist with Moody’s Economy.com and a former adviser to Sen. John McCain (R-Ariz.), said Friday that Congress needs to hurry up and reauthorize expired jobless aid or risk derailing the nascent economic recovery.
“The odds that the economy will slip back into the recession are still well below even,” Zandi said during a conference call with reporters. “But if Congress is unable to provide this help, those odds will rise and become uncomfortably high.” […]
Zandi said the deficit dithering is just bad economics — it’s more important to get the benefits to the people, who will immediately spend the money and help the economy. “Paying for it should not be a necessary condition for passing it,” he said. “In my view, the risks are just too high.”
Zandi said it would be a good idea for Congress to plan to offset the cost of benefits — but not this year or the next year.
Even conservatives should be able to understand this. The Congressional Budget Office has documented that aid to the unemployed is one of the highest-scoring stimulus policies (pdf) for exactly the reasons Pelosi explained. In terms of fiscal bang for the buck, Zandi’s analysis found that the single most stimulative investments the government can make comes from a temporary increase in food stamps — but extended unemployment benefits were a close second. (Both perform far better than tax cuts.)
It seems those with even “half a brain” should appreciate the concept. The point of any stimulus exercise is to inject money into the system. If the government provides a benefit to an individual, and he or she sticks the money into a savings account, that’s not stimulative. But when the jobless receive benefits, they tend to spend it all quite quickly — they have no choice; they’re struggling to get by.
That Republicans and Ben Nelson think the deficit is more important than this is misguided. That media conservatives find this incomprehensible is bizarre.