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Trouble is, Hoyer’s right. Welfare programs like food stamps (actually called SNAP — but I use the names interchangeably) and unemployment compensation stimulate the economy. Who says so? Some left-wing think tank? No, Moody’s Analytics. Moody’s Analytics estimates that in a weak economy, every dollar increase in SNAP benefits generates $1.72 in economic activity. is followed closely by — you guessed it — unemployment insurance, which generates $1.63 in economic activity for every dollar spent. Comparatively, tax cuts generally break even with every dollar in cuts generating a dollar. Of course, income tax cuts would be meaningless to the folks who receive food stamps given they generally receive no income (because many are children) or their incomes are so low they’d owe no income taxes.

The federal government spent about $65 billion on food stamps in 2010. If Moody’s is right, that $65 billion generated about $112.5 billion in economic activity (I wish my 401k gave me a return like that). Now $65 billion is not chump change to a cash starved federal budget, and food stamp participation has grown rapidly in recent years, growing from 25 million recipients in 2007 to about 46 million today. But during that same time the number of Americans in poverty has increased from 35 million to over 45 million. Unemployment increased from just over 5 percent to above 9 percent and now is at just above 8 percent, while 42 percent of unemployed workers have been out of work for more than half a year.

[Continue reading Todd Eberly’s post at The FreeStater Blog.]

Todd Eberly blogs at The FreeStaterBlog. The Local Blog Network is a group of bloggers from around the D.C. region who have agreed to make regular contributions to All Opinions Are Local.


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