For middle-income families, tax cuts and higher government benefits erased almost 90% of the market income losses caused by the recession. For Americans with lower incomes the combination of tax cuts and more generous benefits offset virtually all the market income losses. Millions of laid off workers were clearly made worse off by the recession. But income replacement through the permanent tax and transfer system plus temporary measures to boost families’ spendable incomes achieved their intended goal. For poor and moderate-income families, wage and capital income losses caused by the recession were largely or wholly offset by tax cuts and benefit increases.
Pointer from Mark Thoma.
When someone’s analysis is contrary to what one believes, the overwhelming temptation is to nit-pick the methodology. I try to restrain myself, but in this case I cannot.
What Burtless demonstrates is that the government wrote checks. Did anyone ever question that?
What some of us questioned was the macroeconomic impact of those checks. If you believe that government can manufacture wealth by writing checks, then a zillion dollar combination of tax cuts and transfer payments would make the American people a zillion dollars better off. Seeing that this is absurd, one might want to go back and think more carefully about the macroeconomic analysis.
I am not saying that macroeconomic analysis definitely proves that the stimulus failed. But I fail to detect in Burtless’ piece any contribution to the discussion.