SOME ECONOMIC STIMULUS NUMBERS

I've been looking for estimates about how much the various stimulus options will put into the economy and it seems extending unemployment benefits is the best move for the buck.

Tax Rebates Could Boost Economy Quickly
By MARTIN CRUTSINGER – 21 hours ago

Federal Reserve Chairman Ben Bernanke lent his considerable weight on the side of a stimulus package on Thursday. "Getting money to low and moderate income people is good in the sense of getting a bang for the buck," he told the House Budget Committee. He said packages in the range of $50 billion to $150 billion would be "reasonable" to help the economy.

A separate study of various stimulus proposals shows that some proposals provide a much greater boost than others. Leading this category was extending unemployment benefits, which provides $1.73 in spending increases for each $1 spent during the first year of the program.

"Extending unemployment benefits helps bolster confidence," said Mark Zandi, chief economist at Moody's Economy.com and the author of the study. "If people start running out of their unemployment benefits, they cut back drastically on their spending and it also scares people around them. It is very debilitating on consumer confidence."

Providing states with federal support so they don't have to cut their own programs provides $1.24 in increased spending for each $1 it costs, while a targeted tax cut provides $1.19 boost, according to Zandi's study.

The reason these items had a bigger payout than they cost reflects the fact that the assistance goes to poorer people who spend the extra benefits quickly. This helps trigger what economists call the "multiplier effect" in that a dollar of increased spending gets recycled through the economy, boosting the spending of other people.

By contrast, other proposals which benefit wealthier individuals such as across-the-board tax cuts and reductions in dividends and capital gains taxes were found to return less than their cost during the first year.