Congress has passed, and President Bush has signed, a $152 billion economic stimulus package including tax rebates for individuals and incentives for businesses. But will this be enough to boost the nation’s ailing economy?
Several provisions, which the experts say would provide a more immediate jolt to the economy, were not included in the bill, including a temporary extension of unemployment insurance benefits, a boost in Food Stamp benefits and federal aid to states facing serious budget shortfalls (like Minnesota). We were disappointed by the failure to include these provisions.
According to Mark Zandi, chief economist of Moody’s economy.com, “a $1 increase in unemployment insurance benefits generates an estimated $1.64 in near-term gross domestic product.” The U.S. Department of Agriculture estimates that a $5 billion increase in Food Stamp expenditures would result in a $9.2 billion increase in economic activity and add 82,100 jobs. Because both unemployment insurance and Food Stamps are already operating, any increases could be delivered and spent quickly.
The failure to include federal aid to the states is also disappointing. In 2004, Congress approved $20 billion in federal aid to states. Minnesota received $356 million in aid – much of it used to continue health care coverage for low-income Minnesota families.
Congress may consider a second-round economic stimulus bill later this year, especially if the economy worsens. Let’s hope that Congress will include some of these items missing from the current bill.