Monthly Archives: June 2010

Press release FAIL

We get a lot of business press releases at the Worldwide Businessplex.

A LOT of them.

Some of them are well written.

Some of them, ahem, aren’t.

Witness one work of art today: “If you’d like to speak with CEO Put Name Here, please call …”

It took all of the restraint I could muster to avoid giving Mr. Here a ring.

Which is better: tax cuts or unemployment checks?

I quoted an economist a few days ago saying that extending unemployment insurance once again was not only the right thing to do, but good economic stimulus for the economy. Her argument is that the unemployed have no choice but to spend the money immediately, thereby funding other businesses and jobs. And, while government checks aren’t always good because it can encourage people who can work to avoid it (the long-time knock against welfare), that’s not the case here because there are so few jobs.  Our commentors response was typical: grumbling about liberal give-aways in a lousy economy.

Here’s a bit of support for her statement from another source, Moody’s, generally considered politically middle-of-the-road. It calculates return on investment for either tax cuts or government payments.

Tax Cuts
Nonrefundable Lump-Sum Tax Rebate     1.01 (times  investment)
Refundable Lump-Sum Tax Rebate             1.22

Temporary Tax Cuts
Payroll Tax Holiday                                          1.24
Job Tax Credit                                                     1.30
Across-the-Board Tax Cut                              1.02
Accelerated Depreciation                               0.25
Loss Carryback                                                    0.22
Housing Tax Credit                                             0.90

Permanent Tax Cuts
Extend Alternative Minimum Tax Patch  0.51
Make Bush Income Tax Cuts Permanent  0.32
Make Dividend and Capital Gains Tax Cuts Permanent 0.37
Cut in Corporate Tax Rate                              0.32

Spending Increases
Extending Unemployment Insurance Benefits 1.61
Temporary Federal Financing of Work-Share Programs 1.69
Temporary Increase in Food Stamps        1.74
General Aid to State Governments             1.41
Increased Infrastructure Spending            1.57
Low-Income Home Energy Assistance Program  1.13

What determines the amount of ROI is whether it is saved or invested, and how effectively it is invested. Tax cuts are seen as having less of an impact because, in this economy, the amount tends to be saved rather than spent.