Payroll Tax Holiday Special

Posted on 09/05/2010 at 8:35 am by Bob Cesca

One of the Obama administration’s big recovery ideas at this point is a payroll tax holiday. In terms of stimulus, it’s not as effective as spending, but in terms of temporary tax cuts, it has a decent impact with $1.24 in stimulus for every dollar spent.

Here’s what I worry about. Right now there’s a huge fight over allowing the Bush tax cuts to expire. The expiration was baked into the tax cuts by the Republicans of 2001, knowing that the cuts would create a huge long-term deficit. But now the Republicans are screeching about the Democrats “raising taxes” by allowing that Republican expiration to pass.

Likewise, let’s say it’s six months from now and the payroll tax holiday is set to expire. The Republicans control Congress and the economy is still sluggish. It’s a good bet the Republicans will scream IEEEE! TAX HIKE! when the holiday ends. Maybe a compromise is reached to extend the holiday a little longer. And so on, and so on.

Social Security is gradually de-funded by way of anti-tax screeching.

It’s all hypothetical at this point, but this is a program that’s constantly under attack, and we should be cautious about anything that might take big chunks out of it.

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  • ec

    I worry about the same thing.Yesterday, I heard some idiot pundit say that pumping money into the infrastructure was like “throwing cash from airplanes”. Setting aside how stupid an analogy that is, I do wonder if it is better to throw cash at the problem. Then we don’t have to worry about tax implications.Bush sent out two checks to American households. It was dramatic, swift, and readily apparent.It was also short-sighted and stupid, but it depends on the goals.Personally, I think that the Fed needs to kick it up a notch and stop paying overnight interest on bank deposits. This would get money circulating (in the form of loans) immediately.But that would require that Bernanke, Geitner and Summers all get struck by lightening at once.

  • bob

    {It’s all hypothetical at this point,…}As most of your nutbag rants tend to be.

  • http://www.twitter.com/bobcesca_go Bob_Cesca

    @ec>>>Yesterday, I heard some idiot pundit say that pumping money into the infrastructure was like “throwing cash from airplanes”.Oh good lord. Another wingnut denying the existence of basic math.

  • ec

    @bob the poster,You have yet to show any signs of intelligence. Work on that and get back to us.

  • ec

    @Bob Cesca,I now remember that it was David Brooks on the Friday night “Newshour”. I guess that explains it all.

  • Dan in DE

    What a shameless prick! People like Brooks understand the multipliers, and are well aware how disasterous conservative economic policies have been, but they’re shilling for Republicans anyway, because it’s a steady job with good pay.Anyway, I’d much rather catch cash dropping out of airplanes, than have to collect whatever’s trickling down from America’s wealthy.

  • MrBrink

    A hypothetical compromise, Bob, could make the payroll tax permanent while also making the sunsetting Bush tax cuts at the top permanent– garnishing a fair percentage of the $2 trillion U.S. corporations are currently nesting, tweak the tariffs thereby encouraging less re-importation, draw in the off-shore tax shelters and accounting loopholes.Keep taxes low for business that trains and hires and maybe get creative with tax incentives for those individuals who mentor and prepare new workers.Give the labor force the option to retire at 55 or 60, rather than raising it to an unreasonable fuck off and die mandatory minimum. That could free up the labor market, allow more flexibility and more mobility, with full retiring benefits reinforced– paid for in large part with the permanency of expiring top heavy tax cuts and other potential measures.A permanent payroll tax holiday could mean more buying power to combat the abomination of depressed wages– allowing more dependable stimulus to flow through the fishbowl economy.Buying power is good for business, Businesses.There’s been a gross inequality in the American economy and it’s time for the inequities of concentrated wealth to come to a merciful end.The base economy retains the ghetto taxes at the lower end–state and some federal– high society continues to realize its responsibility to their neighbors and fellow Americans by bearing the bulk of the costs of a healthy and morally sound domestic market.And smile when they file their taxes.But If this is just a gimmick, with no foresight, or equitable stability and vision, it sounds like a political Admiral Ackbar.

  • ec

    Dan in DE, shameless prick indeed. His schtick of saying outright lies and wrapping it in his pathetic, “awe shucks, I am not an expert but…” brand of timidity and deflection really annoys me.

  • http://tarackian.deviantart.com J M Ashby

    I’d be much more infavor of spending on infrastructure. If spending on infrastructure could be combined with a payroll tax cut I dont think it would be such a bad idea. Just a minor tax cut by itself wouldn’t achieve much.I think even if all you wanted was the infrastructure spending, the minor tax cut would be needed to get the votes of the conservadems and 1 or 2 republicans. Because you know, conservatives swarm all over anything labeled a “tax cut” likes flies on shit. They almost cant not vote it.

  • GrafZeppelin127

    “The expiration was baked into the tax cuts by the Republicans of 2001, knowing that the cuts would create a huge long-term deficit.”And knowing that they could rake a Democratic POTUS and/or Congress over the coals by screaming “tax hike!” when they expired.