House Minority Whip Steny Hoyer (D-Md.) told reporters on Tuesday that the two most “stimulative” things the government can do is provide food stamps and unemployment insurance, CNSNews.com reports.
Well if that’s the case, the economy should be thoroughly “stimulated.” A report released by the Congressional Budget Office (CBO) last month states that there are now roughly 45 million Americans receiving food stamps. That’s one in every seven people.
Further, government spending on food stamps, also known as the Supplemental Nutrition Assistance Program (SNAP), increased by 65 percent between 2007 and 2011. It’s frustrating — we should be more stimulated by now. Instead, the U.S. remains in one of the slowest so-called economic recoveries arguably in American history.
Hoyer was apparently asked by a reporter on Tuesday whether Democrats in Congress were reconsidering the “wisdom” of allowing the Bush tax cuts to expire for the country’s most wealthy at the end of 2012 instead of extending the tax breaks to Americans of all income-brackets.
“I haven’t talked to any who are of that mind,” Hoyer said. “If you talk to economists, they will tell you there are two things that are the most stimulative that you can do — one’s unemployment insurance, the other’s food stamps, okay?”
“Why is that?” he asked. ”Because those folks who receive those resources must spend them. And they’ll spend them almost upon receipt. Most economists with whom I talk believe that those with significant discretionary income, that that’s not the case.”
The Bush tax cuts are set to expire on the first day of 2013 unless Congress acts. Meanwhile, a battle is brewing on Capitol Hill as Obama and Democrats only want people making less than $250,000 to keep the Bush tax cuts while Republicans want the rates extended for everyone.
According to CBO projections, allowing the Bush tax cuts to expire on Jan. 1, 2013 would result in a 1.3 percent contraction in GDP when coupled with looming defense cuts.