The new tax cut deal in Washington would curb unemployment at a far higher cost than if the government were to create jobs directly, according to an analysis of its potential effects.
What’s more, predictions about the program’s benefit to the economy differ little from predictions made before the deal was struck. In other words, the tax cut measure might not contribute much to growth. And if it does, it might not be the most efficient strategy the government could have used.
The proposed program–which would include extensions of tax cuts for the wealthy, a payroll tax cut and a reauthorization of unemployment insurance–would save or create about 2.2 million jobs over the next two years, according to analysis by the Center for American Progress. As the government would forgo revenue it otherwise would have collected, the program’s cost would be about $594 billion.