Economic Benefits of Public Programs: Why Federal Dollars Should Be Invested in

[Rick Rowlands]

Why not eliminate the middleman?  Cut Federal taxes and keep the money in the states to begin with!

[irishbobcat]

Economic Benefits of Public Programs: Why Federal Dollars Should Be Invested in the States


As federal aid to states has a very high economic multiplier effect or "bang for the buck," states are some of the most effective vehicles for job creation.  Moody's Analytics finds that every federal dollar spent on extending unemployment insurance benefits fosters $1.61 in economic activity.  Similarly, a federal dollar spent on:

Temporarily increasing food stamps creates $1.74 in economic activity
Aiding state governments creates $1.41 in economic activity
Investing in infrastructure creates $1.57 in economic activity
On the other hand, tax cuts and credits generally do not produce similar economic benefits as assisting families or state governments.  For instance, a dollar spent on cutting the corporate income tax only results in $0.32 of economic activity.  As a result, direct relief to states and a concerted effort to create and sustain jobs for Americans on Main Street is the most prudent course of action.On the flip side, The Economic Policy Institute states the unique danger of state budget cuts, which can ripple through the economy as teachers, nurses and police are laid off, state funds supporting private sector activity are reduced, and individuals receiving state support stop spending in their local communities.