Supply and Demand (in that order): Kudlow Show Tonight

Thursday, November 12, 2009

I will be on CNBC's Kudlow Show Tonight, sometime between 7 and 730p eastern time.

Tino said...: Reich ignores the INTERACTION between means tested social insurance and income shocks. Even if we think unemployment was initially caused by a simple demand shock, means tested programs exacerbate the problem, as demonstrated by Ljungqvist and Sargent.

All the creeping rises in means tested programs, such as Medicaid and S-Chip, over the past decade (that were not fully hitting households in the good years) should be taken into account. Once people are thrown into flat regions of their budget sets these programs start to have a bite. In 2009 spending on means tested programs will rise to $780 billion, a 20% increase from 2007. From the perspective of distorting labor it matter less if this is due to new programs or from old ones affecting more people.

http://www.heritage.org/Research/Welfare/upload/SR_67.pdf

They mentioned the 16% African American unemployment rate. Part of the stimulus was to grant a 5 billion subsidy to states that expanded TANF (welfare) spending. Some states have raised the monthly benefits and altered the income eligibility limits used in their welfare programs.

http://www.cbpp.org/cms/index.cfm?fa=view&id=2878; November 12, 2009 at 7:11:00 PM CST

Supply and Demand (in that order)