One of my favorite fiscal policies through-out the crisis has been to cut the payroll tax. I would have cut both employer and employee and indeed, cut them to zero at the beginning of the recession.
Given that either employers would have used the money to hire or to offest credit losses and retain liquidity. And, that employees would have used the money to spend or pay down debt, I really don’t see how we could have lost from that.
It would have required extremely rapid expansions in the deficit. My proposal would have added an extra $1 trillion a year on to the deficit on top of what already was there. However, it would have provided a punch many times more powerful that what we got.
Anyway, that is history. What is on the table now is an extension of the payroll tax cut put in place by President Obama. The GOP opposes this. Lets not waste time with why.
Lets think about how we can get them not to oppose it. Is a matching or perhaps larger cut in the employer side temptation enough? Is a cut in the corporate rate temptation enough?
These are the ideas I hope folks are kicking around.