NCPA - National Center for Policy Analysis

Comparison of Grassley and Daschle Economic Stimulus Plans

November 9, 2001

The upcoming Senate debate on economic stimulus legislation will likely center around a plan presented by Sen. Tom Daschle (D-S.D.) that spends more and cuts taxes a little, and a plan proposed by Senator Charles Grassley (R-Iowa) that cuts tax more and increases spending some. A Heritage Foundation analysis finds the Grassley bill would create far more jobs -- and more spending, family income and savings -- over the next five years.

Analysts in the Heritage Foundation's Center for Data Analysis used the WEFA U.S. Macroeconomic Model and other tools to project the effects from each bill.

In Fiscal Year 2002 (which began October 1, 2001), they found (after adjusting for inflation):

  • The Grassley plan produces nearly twice as many jobs as the Daschle plan -- 211,000 compared with 108,000.
  • Consumer spending would increase by $27.9 billion with the Grassley plan -- 28 percent more than the $20.0 billion increase under the Daschle plan.
  • And the average savings for a family of four would increase by $752 under the Grassley plan, compared with an increase of $536 under the Daschle plan.

Over the next five years (FY 2002 to FY 2006), the Grassley plan would continue to have a greater stimulative effect:

  • On average, the Grassley plan produces more than seven times as many jobs each year as the Daschle plan -- 283,000 compared to 38,000.
  • The disposable income of an average family of four would increase an average of $1,060 per year under the Grassley plan and only $236 per year under the Daschle plan.
  • The nation's investments would increase an average of $13.4 billion per year under the Grassley plan and only $1.1 billion per year under the Daschle plan.

Source: William W. Beach, D. Mark Wilson, Rea S. Hederman and Ralph A. Rector, "The Economic Effects Of President Bush's And Senator Daschle's Economic Stimulus Plans," Supplement, November 7, 2001, Heritage Foundation.


Browse more articles on Economic Issues