How Stimulating Is the Tax Cut-Jobless Benefit Deal? Part II

Yesterday we posted some forecasts from the Center for American Progress, a liberal research organization, on the stimulative effects of the new Bush tax cuts/jobless benefits compromise. The center’s estimates were largely based on models created by Mark Zandi, the chief economist at Moody’s Analytics; today, Mr. Zandi himself is weighing in.

“The deal’s surprisingly broad scope meaningfully changes the near-term economic outlook,” Mr. Zandi writes. He continues:

Real GDP growth in 2011 will be nearly 4 percent, approximately one percentage point greater than previously anticipated. Job growth will be more than twice as strong, with payrolls growing by 2.6 million. Unemployment will be more than a percentage point lower; instead of hovering near 10 percent through the year, it will end 2011 well below 9 percent.

The biggest bang for the buck comes from the unemployment insurance benefits extension, since money given to unemployed people is very likely to be spent. Tax cuts for wealthy Americans, on the other hand, may not cycle through the economy as quickly, as a large proportion of those tax savings may be salted away rather than spent.

There are, of course, downsides to this legislative deal, which raises the budget deficit and will likely leave the country in a sort of hangover as it fades out. Mr. Zandi writes:

It is also important to note that growth will be slower in 2012 than previously anticipated, as the fiscal drag expected in 2011 is pushed off another year. The deal will also encourage businesses to pull investment forward into 2011, to the detriment of investment in 2012. The economy will end up in about the same place "” as measured by G.D.P., jobs and unemployment "” by mid-2013.

Here is a rundown of Mr. Zandi’s forecasts for what the economy was likely to do in the absence of this particular legislative compromise, and what it will likely do under the new framework (“combined proposals”):

Whether low-income people get good value for the taxes they pay is uncertain, and they might be better off if they retained that money and used it as they chose, an economist writes.

A back-of-the-envelope estimate for how many jobs the deal would help create.

As they campaign for the presidency in 2012, Republicans should push for education changes that ask more of teachers, parents and students, an economist writes.

Among highly educated women who take time off from their careers to raise their children, women with M.B.A.'s suffer the largest percentage "mommy penalty," while those with medical degrees suffer the lowest proportionate loss, with female Ph.D.'s and lawyers falling somewhere in between.

Why not give all workers the information they need to determine if they are paid fairly or discriminated against, an economist asks.

For all the criticism of the Medicare fee schedule for payments to doctors, no one has proposed a detailed, practical alternative, an economist writes.

When “cyclical” unemployment becomes “structural” unemployment, as the long-term unemployed lose their connection to the job market.

Imagine if you had to calculate a new tax rate for each additional $2,000 of income you earned. That was the case for many households in 1975.

A new study finds that delayed marriage and childbearing are leading to increased stress for American men and women in balancing work and family obligations.

A comparison of France and the United States suggests that increasing tax revenue will ultimately put a burden on the poor, not the wealthy, an economist writes.

Catherine Rampell is the economics editor at nytimes.com.

David Leonhardt writes the Economic Scene column, which appears in The Times on Wednesdays.

Motoko Rich is an economics reporter for The New York Times.

Michael Powell is an economics reporter for The New York Times.

Steven Greenhouse writes about labor and workplace issues for The New York Times.

Liz Alderman writes about European economics, finance and business from Paris.

Sewell Chan writes about economic issues from Washington D.C.

Jack Ewing writes about European economics and business from Frankfurt.

Economists offer readers insights about the dismal science.

Economics doesn’t have to be complicated. It is the study of our lives "” our jobs, our homes, our families and the little decisions we face every day. Here at Economix, David Leonhardt, Catherine Rampell and other contributors will analyze the news and use economics as a framework for thinking about the world. We welcome feedback, at economix@nytimes.com.

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An accounting of the government’s rescue package.

Three economists explain what worked and what didn't.

A map of unemployment rates across the United States, now through January.

Faces, numbers and stories from behind the downturn.

A series about the surge in consumer debt and the lenders who made it possible.

A series exploring the origins of the financial crisis, from Washington to Wall Street.

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