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What Does the Unemployment Rate Mean for Government Spending?
What Does the Unemployment Rate Mean for Government Spending?
What Does the Unemployment Rate Mean for Government Spending?
What Does the Unemployment Rate Mean for Government Spending?
What Does the Unemployment Rate Mean for Government Spending?
What Does the Unemployment Rate Mean for Government Spending?
What Does the Unemployment Rate Mean for Government Spending?
What Does the Unemployment Rate Mean for Government Spending?
What Does the Unemployment Rate Mean for Government Spending?
What Does the Unemployment Rate Mean for Government Spending?
What Does the Unemployment Rate Mean for Government Spending?
What Does the Unemployment Rate Mean for Government Spending?
What Does the Unemployment Rate Mean for Government Spending?
What Does the Unemployment Rate Mean for Government Spending?
What Does the Unemployment Rate Mean for Government Spending?
What Does the Unemployment Rate Mean for Government Spending?
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What Does the Unemployment Rate Mean for Government Spending?

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Dr. Keith Hall presents on unemployment and the economy for this Capitol Hill Campus event.

Dr. Keith Hall presents on unemployment and the economy for this Capitol Hill Campus event.

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  • 1. Slide 1: Main Points Income Redistribution •  Increasing share of government spending is transferring income from current or future taxpayers to the jobless. Government Dependency •  Hit record high. Will ever return to “normal” level? Nothing Helps Like Jobs •  Joblessness impacts government spending. It is not so clear that the reverse is true.
  • 2. Slide  2:  Employment  Ra1o   66%   64%  share  of  working  age  popula1on   10.5  million  jobs   62%   60%   58%   shaded  areas  denote  recession   56%   1990   1995   2000   2005   2010   Source:  Bureau  of  Labor  Sta8s8cs   Produced  by  Keith  Hall  ,  Mercatus  Center  at  George  Mason  University.  
  • 3. Slide 3: Unemployment Impact on GovernmentThree types of effects:1.  Slower growth of income slows tax revenue2.  Government spending on unemployed Increases3.  Government spending on low-income families increases
  • 4. Slide  4:    Loss  of  Na1onal  Income   $18   $16   $14   Poten8al  GDP  trillions  of  2012  dollars   $12   GDP   $10   $8   Loss  =  $1  trillion/year   $6   $4   $2   shaded  areas  denote  recession   $0   1960   1965   1970   1975   1980   1985   1990   1995   2000   2005   2010   Source:  Bureau  of  Economic  Analysis,  Congressional  Budget  Office   Produced  by  Keith  Hall  ,  Mercatus  Center  at  George  Mason  University.  
  • 5. Slide  5:  Current  Gov’t  Receipts  &  Expenditures   (share  of  GDP)   40%   35%   30%   25%  Percent   20%   Current  expenditures   15%   Current  receipts   10%   shaded  areas  denote  recession   5%   0%   1950   1955   1960   1965   1970   1975   1980   1985   1990   1995   2000   2005   2010   Source:  Bureau  of  Economic  Analysis,   Produced  by  Keith  Hall  ,  Mercatus  Center  at  George  Mason  University.  
  • 6. Slide 6: How Does GovernmentSpending Enter Into GDP?Four Main Types of Government Spending 1.  *Government Consumption (46%) 2.  *Government Investment (8%) 3.  Transfer Payments (43%) 4.  Interest Payments (8%) *part of GDP
  • 7. Slide 7: Federal GovernmentSpending and GDP Four Main Types of Government Spending 1.  *Government Consumption (27%) 2.  *Government Investment (4%) 3.  Grants-In-Aid to S&L Govt (12%) 4.  Other Transfer Payments (47%) 5.  Interest Payments (8%)
  • 8. Slide  8:    Government  Spending  by  Type   (share  of  GDP)   25%   19.5%  of  GDP  in  2012   20%   Consump8on  &  Gross  Investment   Social  Benefits   15%  percent   Interest  Payments   10%   5%   shaded  areas  denote  recession   0%   1960   1965   1970   1975   1980   1985   1990   1995   2000   2005   2010   Source:  Bureau  of  Economic  Analysis   Produced  by  Keith  Hall  ,  Mercatus  Center  at  George  Mason  University.  
  • 9. Slide  9:    Changing  Role  of  Federal  Government   (share  of  GDP)   15%   Consump8on  &  Gross  Investment   Social  Benefits   Interest  Payments   Grants-­‐in-­‐aid  to  state  and  local  governments   10%  percent   5%   shaded  areas  denote  recession   0%   1960   1965   1970   1975   1980   1985   1990   1995   2000   2005   2010   Source:  Bureau  of  Economic  Analysis   Produced  by  Keith  Hall  ,  Mercatus  Center  at  George  Mason  University.  
  • 10. Slide  10:    Rise  of  Dependency   Social  Benefit  as  Share  of  Personal  Income     20%   18%   16%   14%   12%  percent   10%   8%   6%   4%   2%   shaded  areas  denote  recession   0%   1960   1965   1970   1975   1980   1985   1990   1995   2000   2005   2010   Source:  Bureau  of  Economic  Analysis   Produced  by  Keith  Hall  ,  Mercatus  Center  at  George  Mason  University.  
  • 11. Slide  11:  Receipt  of  Social  Benefits  by  Type   15%   shaded  areas  denote  recession   Unemployment  Compensa8on   Other  Social  Benefits   Means  Tested  Spending  (approximate)  share  of  personal  income   10%   5%   0%   1960   1965   1970   1975   1980   1985   1990   1995   2000   2005   2010   Source:  Bureau  of  Economic  Analysis   Produced  by  Keith  Hall  ,  Mercatus  Center  at  George  Mason  University.  
  • 12. Slide 12: Programs Targeting theUnemployed1.  Unemployment Insurance •  Unemployment Compensation •  Trade Adjustment Assistance •  Disaster Unemployment Assistance2.  Healthcare Assistance •  Health Coverage Tax Credit •  Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA)3.  Job Search and Training Assistance •  Workforce Investment Act of 1998 •  Wagner-Peyser Act of 1933
  • 13. Slide  13:  Unemployment  Compensa1on     $180   $160   $140  billlions  of  current  dollars   Emergency   $120   Other   $100   $80   $60   shaded  areas  denote  recession   $40   $20   $0   1960   1965   1970   1975   1980   1985   1990   1995   2000   2005   2010   Source:  Bureau  of  Economic  Analysis   Produced  by  Keith  Hall  ,  Mercatus  Center  at  George  Mason  University.  
  • 14. Slide 14: Means-Tested Programs•  Low income, available regardless of employment status •  126 different federal programs•  Largest programs (billions) o  Medicaid  –  $417.3   o  Supplemental  Nutri8onal  Asst  Program  (SNAP)  –$74.6   o  Supplemental  Security  Income  –  $52.6   o  Earned  Income  Tax  Credit  -­‐-­‐  $56.6   o  Child  Tax  Credit  –  $28.3   o  Federal  Pell  Grants  -­‐  $41   o  Temporary  Assistance  for  Needy  Families  (TANF)  –  $21  
  • 15. Slide  15:  Trends  in  Social  Benefits     and  the  Jobless  Rate   25%   50%   share  of  working  age  popula1on   20%   45%  share  of  personal  income   15%   40%   10%   35%   Social  Benefits   5%   Jobless  Rate  (right  axis)   30%   shaded  areas  denote  recession   0%   25%   1960   1965   1970   1975   1980   1985   1990   1995   2000   2005   2010   Source:  Bureau  of  Economic  Analysis,  Bureau  of  Labor  Sta8s8cs   Produced  by  Keith  Hall  ,  Mercatus  Center  at  George  Mason  University.  
  • 16. Slide  16:    Trends  in  the  Poverty     and  Jobless  Rates   25%   50%   share  of  working  age  popula1on   20%   45%  share  of  popula1on   15%   40%   10%   35%   Poverty  Rate   5%   30%   Jobless  Rate  (right  axis)   0%   25%   1960   1965   1970   1975   1980   1985   1990   1995   2000   2005   2010   Source:  Census  Bureau,  Bureau  of  Labor  Sta8s8cs   Produced  by  Keith  Hall  ,  Mercatus  Center  at  George  Mason  University.  

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