Tom Vilsack, Secretary of Agriculture, recently stated that Food Stamps are stimulus and each Food Stamp dollar generates $1.84 in economic activity.
I believe Mr. Vilsack is factually correct. I also believe the following:
1. If the Food Stamp dollar is funded by pulling a dollar out of the economy (taxes) the net economic activity is zero.
2. If the Food Stamp dollar is funded by borrowing the benefits of the additional economic activity should be measured against any negatives such as an increase in debt (cost/benefit analysis).
3. If the Food Stamp dollar is funded by “printing money” it is inflationary.
The bottom line is that stimulus is not always a good thing. Excuse me I while I pour my 7th cup of coffee.
Depends on where the money is being taken out of. Some money doesn't do much to add to the economy.
ReplyDeleteThe comment on debt is spot on though, especially with the situation we have now, where any debt will likley multiply before it's actually paid off.
Good points Tom and Solomon Kleinsmith.
ReplyDeleteI also wonder -- is Vilsack deducting the economic benefit that would have come from the Food Stamp dollar if it hadn't been taxed out of someone else's hands and/or added to the debt?
Vilsack's smoke-and-mirrors economics speak is unsettling. It's hard not to think: Either they see us as children who don't know any better, or else they actually are children who don't know any better.
My guess is that Vilsack really is trying to make a positive point about a program he believes in. If you're going to talk about costs/benefits, it seems a better argument would go something like this: Without this kind of interventionist government safety net, it's possible the social and financial consequences would be far more costly.
Pelosi made the same claim (as Vilsack) for unemployment benefits.
ReplyDeletehttp://www.youtube.com/watch?v=WUAG3Fqz56s&feature=player_embedded