How About a Payroll Tax Stimulus?

[Pryderi]

Did anyone watch the Daily Show last night? Jon Stewart interviewed the author of the editorial posted below.

Here's the Stewart interview:
http://www.thedailyshow.com/video/index.jhtml?videoId=217029&title=lawrence-lindsey

http://online.wsj.com/article/SB123318933384726785.html?mod=googlenews_wsj
How About a Payroll Tax Stimulus?
For a similar amount of money, we could give workers $1,500.

By LAWRENCE B. LINDSEY

Congress and the Obama administration seem near to deciding the details of an economic stimulus package. Unlike the efforts of President Ronald Reagan and President George W. Bush, who also inherited declining stock markets and shrinking economies, this package is heavily weighted toward direct government spending, transfers to state and local governments, and tax changes that have virtually no effect on marginal tax rates.
AP

Christina Romer, chairman of the Council of Economic Advisers

Today the Reagan tax cuts are widely viewed as successful. Opinions on the longer-term effects of the Bush tax cuts are more diverse, but the short-term effects of the 2001 and 2003 cuts are generally credited as having been well-timed.

And what of the plan being put forward now? As crafted, it is unlikely to produce the desired results. For a similar amount of money, the government could essentially cut the payroll tax in half, taking three points off the rate for both the employer and the employee. This would put $1,500 into the pocket of a typical worker making $50,000, with a similar amount going to his or her employer. It would provide a powerful stimulus to the spending stream, as well as a significant, six percentage point reduction in the tax burden of employment for people making less than $100,000. The effects would be immediate.

By contrast, the stimulus now under consideration would suffer from the usual problems of government spending. The Congressional Budget Office and the Joint Committee on Taxation have calculated that only $170 billion, or about one-fifth of the $816 billion package will be spent in fiscal 2009. An additional $356 billion will be spent in 2010. That leaves $290 billion to be spent when even the most pessimistic forecasters think the economy will be in recovery mode.

[ixion]

1. Yes. The 'stimulus' needs to be from the ground up, not vice versa, as it is now

if the so-called bank 'bailout' (a.k.a. con job) had been from the bottom up it would have cost far less (about 100B) and actually have had the effect of stabilizing the mortgage fallout.

As it played out, all it really did was to provide good cash for for banks to a) have parties; b) pay massive bonuses; c) buy up other banks; d) shore up the losses of the top 1%.

This, as far as I can see, was the result of the 'bailout'.

And, incidentally, how have the banks repaid the taxpayer? Why by raising fees and interest rates on their swollen credit cards, of course.

Ah, yes. Stimulus: The Grand Give-away of America's Treasury and Heritage to the World's Wealthy.

[FormerDittoHead]

2. IMO - I LOVE this idea... n/t

[napi21]

3. I think it's a foolish idea! It's the same as if you had 2/3 of your

mortgage payment put asid, but instead of looking for a way to get the final 1/3, you decided to use some of that mtgg. money to pay your car payment.

In other words, the programs the P/R taxes go into are already underfunded...especially medicare...but because we now need money to save jobs and the economy, youu want to make them WORSE!

[Moostache]

4. I call bullshit.

The major problem with this line of thinking is that it assumes we can bring back the "good old days" of the late 1990's to the early 2000's and just start spending away again without addressing the REAL issue - the chasm of wealth distribution between the top 1% (really it is the top 0.01% more than any other group) and everyone else and the basic fact that America does not MAKE anything any longer.

We have to rebuild and reinvent the entire economy - not just stimulate "spending" again! The country is BROKE! The only people who have been amassing fortunes for the last 8 years are of no mind to share that wealth with the society they extracted it from and the rest of us simply do not have the combined wealth necessary to be the world's engine of consumption any longer.

This nation needs to return to sanity and fairness (from those who benefit the most from the system, the most is expected to FUND the system) in its tax policies, a middle-class generating manufacturing and research economy (building a NEW transportation model for a NEW century, upgrading our power generation and distribution systems and overhauling our agricultural system are just a few easy places to get started), and finally we need to be world leaders in this effort. EVERYONE is hurting. Riots are breaking out across the globe already and the forecast is for a lot more dark before the dawn can break. Narrow minded, backward-looking policies are not what we need right now.

Saving the economy is not about resuscitating it for another bubble. The party is over and its time to clean up the mess, its not time to beg the bartender for just one more round after last call....

[bemildred]

5. This is an attack on the Social Security system.

Which is supposed to have a funding "crisis" already. If they want to put money in peoples pockets, then they need to create lots of good jobs.