Right-wing media freak out over Pelosi's accurate unemployment benefits comment

Written by Matt Gertz

Published

Right-wing media figures are jumping on Nancy Pelosi's comment today that unemployment benefits are a “job creator” that “creates jobs faster than almost any other initiative you can name.” (Representative comment from Doug Powers: Pelosi is “around the bend,” “demonstrating lunacy”).

They are not, of course, pointing out that she's basically right.

As we've repeatedly noted, economists, including Congressional Budget Office director Douglas Elmendorf and McCain economic advisor Mark Zandi, have pointed out that increases in unemployment benefits are among the most effective forst of economic stimulus. In congressional testimony, Elmendorf has said:

Transfers to persons (for example, unemployment insurance and nutrition assistance) would also have a significant impact on GDP. Because a large amount of such spending can occur quickly, transfers would have a significant impact on GDP by early 2010. Transfers also include refundable tax credits, which have an impact similar to that of a temporary tax cut.

A dollar's worth of a temporary tax cut would have a smaller effect on GDP than a dollar's worth of direct purchases or transfers, because a significant share of the tax cut would probably be saved. The nonbusiness tax cuts in H.R. 1 would reduce revenues much more in calendar year 2010 than in calendar year 2009 because much of the reduction in taxes would be realized by households when they filed their returns in 2010.

Likewise, Zandi has said that “Extending UI [unemployment insurance] Benefits” would boost GDP by $1.64 for every dollar spent, a greater “Bank for the Buck” than any other provision he analyzed except increasing food stamps ($1.73 per dollar spent).

Moreover, since unemployment checks are distributed through an already existing system, they can be paid out very quickly, thus providing an economic boost faster than, say, infrastructure spending.

These are, of course, the very points that Pelosi was making. But as usual, rather than attempt to actually understand the issues, the right-wing media are blindly going on the attack.