The poorest gained more from the government than they lost during the height of the crash

July 16, 2012

How much did the stimulus really help ordinary Americans? Jared Bernstein crunches the new data that the Congressional Budget Office recently released to help quantify the impact of both tax cuts and benefit transfers like food stamps, unemployment insurance, and other safety net programs. He finds that the poorest Americans gained more in government tax cuts and benefits than they lost in income at the height of the crash, in large part because of the 2009 stimulus.

From 2007 to 2009, income for the lowest 20 percent of Americans dropped by $1,300 on average. But, Bernstein points out, "their transfers rose and their federal taxes fell enough to more than offset the loss, such that their post-tax-transfer income was $600 higher in 2009 than in 2007."


(CBO, via Jared Bernstein)

Americans in the 40 to 60 percent range of income — i.e. the middle-class — also benefited significantly from government tax cuts and transfers. The benefits weren't enough to offset their average $6,000 in income losses entirely, but they offset it by $5,000 — recuperating 83 percent of the loss.


(CBO, via Jared Bernstein)

Finally, Americans in the top 20 percent recovered significantly less of their income from tax cuts and benefit transfers, though they still recuperated 33 percent of their income due to government policies.


(CBO, via Jared Bernstein)

However, as Bernstein notes, "higher income households appear to have rebounded most quickly post-2009," with the top 1 percent of Americans seeing a 10 percent boost in income by 2010, according to the CBO. Poor and middle-class Americans have had a harder time getting back on their feet at the same time that the boost from the stimulus has faded.

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Sarah Kliff | July 16, 2012