The economic malpractice by the Obama administration is shameful. A while ago, I argued that one of the few moves that Obama could make politically to jump start the economy would be a temporary elimination of the payroll tax for workers. This could increase consumer demand (although not nearly as much as a jobs program would. Today, Bloomberg reports that the Obama administration is considering a payroll cut, but on the employer side:
President Barack Obama’s advisers have discussed seeking a temporary cut in the payroll taxes businesses pay on wages as they debate ways to spur hiring amid signs that the recovery is slowing, according to people familiar with the matter….
Targeting the employer side of the payroll tax could both attract Republican support and spur job growth, said Christina Romer, who was Obama’s first chairman of the White House’s Council of Economic Advisers.
“A cut in the employer side of the payroll tax could absolutely help accelerate job creation,” Romer, an economist at the University of California at Berkeley, said in an interview. “In addition to the usual beneficial effect on demand, this tax cut would make hiring less expensive.”
I don’t know what Romer is thinking (although given her track record of lowballing unemployment, it’s par for the course). Businesses won’t hire until consumer demand picks up. The savings businesses would receive won’t be plowed back in wages (which would increase demand). Instead, it would just be added to the record high pile of cash corporations are already hoarding.
If they’re going to push for tax cuts, have a cut that helps middle- and low-income workers, since they will spend the money.
Rockefeller Republicanism isn’t going to cut it: people have to like this crap. It’s like he’s trying to lose the 2012 election.