President Obama wants to cut payroll taxes in half to put more money in the pockets of workers under the premise that fatter paychecks mean people will buy more, leading to more jobs.
The White House figures that would put about $1,500 in the pockets of the average working family. That alone would cost the government some $175 billion next year, according to Moody's Analytics.
That’s almost twice what the president wants to spend putting people to work building things like roads, bridges and schools.
But is there any evidence that payroll tax cuts help boost the economy?
Opinions vary, but one thing is certain: It’s hard to predict what families will do with the extra cash, said economist Matthew Shapiro at the University of Michigan.
“Our findings suggest what they will do depends very much on what they expect the near future to look like,” Shapiro said.
If the economy’s looking weak, then people might hang on to that cash, he said.
But, if the economy picks up, “Households might be more comfortable spending the extra cash rather than using it as a buffer against a very uncertain future,” he said.
Shapiro has studied what people said they did with money they saved from payroll tax cuts in 2011. Most of them said they didn’t spend it. They used it to pay off debt or they saved it.
If that’s the case with Obama's latest cuts, that won't add much to economic growth.
That’s why government spending programs on roads, bridges and school repairs give more bang for the buck in boosting the economy, said Lawrence Mishel with the Economic Policy Institute. The government always spends money, though not always quickly.
"The government doesn’t save any money. They don’t pay any debt with it,” Mishel said. “They’re also less likely to generate imports. People, even when they go out and spend, may buy a bunch of stuff from China, which stimulates China, not the U.S."
However, giving workers more money helps in times like these, Mishel said. The money from this year’s payroll tax cut helped families deal with higher food and gasoline prices.
That may give a clue as to why the president's package would put the most money into fattening workers' paychecks - more than he would give in tax breaks to employers and more than he would give to brick-and-mortar projects that create jobs.
Bill McInturff is a Republican pollster whose job is taking the pulse of voters, especially swing voters. He has written about how the spiral in consumer confidence is tied to the downward spiral in people’s confidence in their leaders.
McInturff said he’s hearing one thing over and over in focus groups around the country.
"They’re saying, 'Look, the big banks got a bailout, the car companies got a bailout - who’s left to bail ME out?'"
Click the audio player to hear this story from CNN Radio's Libby Lewis:
Comments of the Day:
"That moose is literally hung over."–Goochx
"In an ever-gloomier world, this story was sorely needed. Thanks, CNN."–Gaucho420
Per Johansson was returning to his home near Gothenburg, Sweden, when he heard "something screaming with a very dark voice." At first he thought it was his "crazy neighbors," but it turned out to be a drunk moose stuck in his apple tree. CNN.com readers were delighted with the story. Some shared that it is not unusual for animals to get drunk on fermented fruit.
flyingrhino said, "You pretty much have to click a link like this when you see it, and when the picture loads it is its own reward." hildaman4 said, "Kudos CNN, for helping Gustav out and purchasing some of his photos!"
Numan7 said, " 'Once free, the moose collapsed on the ground and fell asleep. So we let him sleep it off and went back home': I've got tears streaming down my face." Leylahur said, "Me too! I about fell off my chair laughing when they said 'Today the moose came back and walked around the yard. ... I think it likes it here.' Ya think?! TOO funny!"
huxleia asked, "Who hasn't gotten drunk and fallen asleep in an apple tree?" LaChupacabra said, "CNN, I'm also saving up to buy a 'Playstation.' Can I send you photos of the aftermath of a drunken stag night?"
DelishusCake said, "I bet he'll have a wicked hangover." amandarose28 said, "I will have what the Moose is having, and make that a triple." drift said, "Must have been drinking Moosehead beer."
fleabite said, "I had a horse in an apple orchard pasture who got falling-down drunk on apples every fall, and I had to move her or she would be drunk for days. Bleary-eyed and wobbled-footed, she loved her apples when they fermented."
ActivistJudge said, "Fun experiment: After Halloween, leave your Jack O'Lanterns in the garage in a cardboard box. Sprinkle a little sugar on them and just a little water. Wait a week. Once it smells sweet and rotten, take it out, set it in the yard and wait for the squirrels to find it. Drunk rodents are hilarious to watch."
ttmt said, "I want to see the other two photos." Jac999 said, "Me too!" Leylahur said, "Me three!" 🙂
A 6.7 magnitude earthquake struck near Vancouver Island, British Columbia, Friday afternoon, according to the U.S. Geological Survey.
The epicenter was about 175 miles west of the city of Vancouver and nearly 50 miles underground.
There was no immediate danger of a tsunami, authorities said.FULL STORY
American spy networks have intercepted communications from a known al Qaeda operative in Pakistan that indicates plans for a potential terrorist strike in New York or Washington D.C, according to a senior U.S. official.
The communication comes from a source that has in the past provided accurate information, the official said, prompting intelligence officials to sift through communications from other known al Qaeda cells.
No corroborating evidence has been uncovered, the official added.
The information indicates that the strike - thought to come from a vehicle-borne bomb - is meant to coincide with the 10th anniversary of the September 11th, 2001 attack.FULL STORY
Texas needs an immediate disaster declaration from President Barack Obama allowing access to heavy equipment and other assistance to help battle wildfires burning across the state, Lt. Gov. David Dewhurst said.
The White House has not responded to the state's previous request, Dewhurst contends, and "we need help yesterday."
There was no immediate response from the White House.
A disaster declaration would give the state access to heavy equipment, personnel, supplies and other support that would help it respond after nearly 300 consecutive days of wildfires, Dewhurst said.
Obama has approved a limited disaster declaration for fires in April and May.
"But this problem has been ongoing since January," Dewhurst said. "And if anything it's gotten worse."FULL STORY
Would losing your Maserati for speeding be akin to paying a million-dollar fine for jaywalking?
That may be a question five drivers in British Columbia will soon ask themselves.
The five are among 13 owners of high-end sports cars who had their vehicles impounded last week after what Royal Canadian Mounted Police allege was a street race on a provincial highway in suburban Vancouver that reached speeds of 120 mph (200 kph). Police put the total value of the vehicles at $2 million.
Police fined each of the drivers, 12 men and one woman all under age 21, $196, but lacked evidence to pursue more severe sanctions, they said. They looked for other avenues to get their message across that street racing would not be tolerated.
“After speaking to witnesses and gathering information, police determined there was not enough evidence to proceed with criminal charges,” Superintendent Norm Gaumont, head of Traffic Services for the RCMP in the Lower Mainland, said in a press release. “With the criminal avenue closed to us, we decided to see if there was enough evidence to proceed civilly.”[cnn-video url="http://www.cnn.com/video/#/video/crime/2011/09/09/dnt-canada-street-racing.ctv-network"%5D
When the towers of the World Trade Center fell on September 11, 2001, one American was not on the planet.
Astronaut Frank Culbertson had been aboard the International Space Station for a month when the 9/11 attacks occurred, joined only by two Russian cosmonaut crew mates. He could only monitor the events of the day from 300 miles above the Earth.
On Friday, NASA released letters Culbertson wrote and images he took as the space station passed over the New York City area after the 9/11 attacks.
Culbertson wrote that he first heard of the attack via radio from a NASA flight surgeon.
"I was flabbergasted, then horrified. My first thought was that this wasn't a real conversation, that I was still listening to one of my Tom Clancy tapes," Culbertson wrote. "It just didn't seem possible on this scale in our country. I couldn't even imagine the particulars, even before the news of further destruction began coming in."
And he closed his letter on that first day:
"Other than the emotional impact of our country being attacked and thousands of our citizens and maybe some friends being killed, the most overwhelming feeling being where I am is one of isolation."
In a speech to a joint session of Congress, President Obama told lawmakers to "stop the political circus and actually do something to help the economy" by quickly approving a $447 billion package of measures so he can sign it into law.
"The people of this country work hard to meet their responsibilities. The question tonight is whether we'll meet ours," Obama said to applause. "The question is whether, in the face of an ongoing national crisis, we can stop the political circus and actually do something to help the economy. The question is whether we can restore some of the fairness and security that has defined this nation since our beginning."
In detailing the plan, he noted that there was nothing controversial in the bill and that everything was paid for. He spoke specifically to the need to get the economy up and running, help those who are unemployed, and give incentives to businesses that hire the unemployed and groups that are chronically underemployed.
How did you feel about Obama's job plan? We took a look at widespread reader comments, iReport reactions and Twitter reactions to the speech to see whether Obama presented a plan you liked, that you felt would work, or if he disappointed you. More than 16,000 reader comments (as of this post) came flying in, along with numerous iReports and tweets.
Robert Hallman told iReport that as a teacher a substitute teacher in Fort Worth, Texas, he's going to be looking for jobs once he starts an alternative teaching program.
When the president spoke about his job plans, he specifically referenced jobs for military members and teachers, something Hallman was happy to hear.
"If there will be more teaching jobs, that would be good for me," he said. "I have friends in the military as well as some college friends who might benefit by increased job opportunities."
Hallman praised Obama's speech, especially in comparison to how he felt Obama handled the debt ceiling issue, and was hopeful that this speech and bill would change things around.
"During the Deficit Ceiling negotiations the President was a no show, a non participant. He just let the two parties bicker, fight, and whine just like a room full of Kindergartners. Tonight the President had a strong showing. He told the members of Congress that they NEED to work together because WE the the People demand nothing less," Hallman wrote. "Overall the President showed us something that we haven't seen in a long time. A politician with belief and conviction."
Parenting isn't an exact science, which is probably why there's so much variation in technique from family to family. But sometimes, parents employ practices that raise eyebrows. Whether it's dressing a daughter up like a cinematic prostitute for a beauty pageant or giving your toddler fake breasts, you've gotta watch these controversial parenting choices.
Thousands of Egyptians converged on Cairo's Tahrir Square on Friday to demand reforms in a turnout dubbed "correcting the path of the revolution."
Protesters - who gathered in a festive atmosphere - are critical of the performance of the Supreme Council of the Armed Forces and the government after President Hosni Mubarak was toppled from power in February.FULL STORY
Syrian security forces barged into a hospital and snatched 18 wounded patients, including five from an operating room, the Human Rights Watch reported, citing witness accounts.
The action occurred Wednesday at al-Barr hospital in the restive western city of Homs during a major military operation there. Human Rights Watch also reported that security forces prevented medical personnel from reaching wounded people in several Homs neighborhoods.
The report was issued Thursday as Syrian security personnel continued their unrelenting crackdown on protesters who take to the streets daily to rail against the Bashar al-Assad regime and its policies.FULL STORY
A massive power outage that left millions in the dark across portions of the southwestern United States and northwestern Mexico eased early Friday, with the power back to all 3.5 million residents of San Diego who had gone without electricity for hours.
The outage was not related to terrorism, officials said. It may have begun with work at an Arizona power plant that provides some electricity to California customers.
At its peak, more than 5 million people in California were without power, along with others in Arizona and portions of Mexico. It was unclear how many people remained without power early Friday.
California officials urged residents to conserve power all day in an effort to protect what San Diego Gas & Electric Co. Vice President David Geier called a "fragile" power system.FULL STORY
Interpol issued Red Notice arrest warrants Friday for fallen Libyan leader Moammar Gadhafi, who is wanted for alleged crimes against humanity.
Warrants also were issued for one of his sons, Saif al-Islam Gadhafi, and a brother-in-law, Abdullah Al-Senussi, who served as the regime's intelligence chief. They are also wanted for alleged killings and persecution in the Libyan uprising that erupted in February.
A Red Notice allows Interpol, the international police agency, to widely circulate arrest warrants with an intention to extradite suspects to the International Criminal Court.
The notices were issued after Luis Moreno-Ocampo, the prosecutor of the criminal court, asked Interpol to take the step.FULL STORY
[Updated at 8:02 a.m ET] San Diego Gas and Electric Company says it has restored power to all 1.4 million customers in its service area affected by a massive power outage that began Thursday afternoon.
[Updated at 6:56 a.m. ET] By early Friday morning, power had been restored to 710,000 consumers in San Diego County, the utility said. Power was back on late Thursday for consumers in Arizona and California's Orange and Imperial counties.
Millions, though, were still without power.
[Posted at 5:42 a.m. ET] The California ISO, the state's power grid operator, says nearly 5 million people in San Diego, Orange and Imperial counties may have been affected by the power outage.
The number is an estimate of the average number of people living in households in the region that were without power at the height of the blackout.
The total includes San Diego Gas & Electric's estimated 1.4 million customers, or 3.5 million people, who were without power at the height of the outage.
About 20,000 consumers, or 60,000 people, in Orange County and another 150,000 consumers, or 450,000 people, in Imperial County were without power.
The total does not include those in Arizona or Mexico who were without power.
Watch CNN.com Live for continuing coverage of the events commemorating the 10th anniversary of the 9/11 attacks.
Today's programming highlights...
8:00 am ET - Panetta honors 9/11 first responders - Defense Secretary Leon Panetta attends a breakfast with a group of 9/11 first responders from Northern Virginia.
The California ISO, the state's power grid operator, says nearly 5 million people in San Diego, Orange and Imperial counties may have been affected by a massive power outage.
By early Friday morning, power had been restored to 710,000 consumers in San Diego County, the utility said. Power was back on late Thursday for consumers in Arizona and California's Orange and Imperial counties. Millions, though, were still without power.
So, what do you need to keep in mind during the power outage?
The big three things to focus on, according to the Red Cross, are your food, any electrical equipment, generators and being aware of carbon monoxide.
If you are still om the critical 48 hours window from the time power has gone out there are still a few things you can do to preserve your food. Take a cooler and transfer any food you might want from the freezer or fridge to a cooler with ice or dry ice.
Your refrigerator will only keep food safely cold for about 4 hours if it is unopened and a full freezer will keep the temperature for approximately 48 hours, but only if the door remains closed. If you don't have dry ice to keep these items from going bad, consumption may leave you susceptible to illness from spoiled food.
Here are some tips from the FDA, USDA, CDC and The Red Cross on what to do:
Interpol has issued Red Notice arrest warrants for fallen Libyan leader Moammar Gadhafi, who is wanted for alleged crimes against humanity.
Red Notices were also issued against Saif al-Islam Gadhafi, and his brother-in-law, Abdullah Al-Senussi, who served as the regime's intelligence chief. They are also wanted for alleged killings and persecution in the Libyan uprising that erupted in February.
A Red Notice allows Interpol, the international police agency, to widely circulate arrest warrants with an intention to extradite suspects to the criminal court.
"Moammar Gadhafi is a fugitive whose country of nationality and the International Criminal Court want arrested and held accountable for the serious criminal charges that have been brought against him," said Interpol Secretary General Ronald Noble.
The request "will significantly restrict the ability of all three men to cross international borders and is a powerful tool to help in their location and arrest."
A senior U.S. official said this week the U.S. does not know where Gadhafi is and U.S. official don't think Libyan rebel leaders know either.FULL STORY
President Barack Obama has signed emergency declarations covering 42 counties in Pennsylvania and 15 counties in New York after the remnants of Tropical Storm Lee brought near-historic levels of flooding to the region.
The declarations help speed federal relief efforts through the Federal Emergency Management Agency and open up federal funding.
Rivers have crested in some areas but are still rising in others.
NASA delayed its Friday launch of a moon research mission because of weather issues and will retry on Saturday.
The mission, called GRAIL, will study how the moon was formed. It will explore "the structure of the lunar interior, from crust to core... to advance understanding of the thermal evolution of the moon," NASA said.
The mission will provide new information about how the moon formed and will allow students to take their own pictures of its surface, panelists announced at a news conference at NASA headquarters in Washington on Thursday.
The two spacecraft will be launched in the same housing, which will separate. They will enter synchronized orbits in January, principal investigator Maria Zuber said. The slow trip saves energy. Once in orbit, their speeds will increase when they pass over formations on the moon's surface, allowing scientists to measure those formations based on the distance between the two spacecraft.
The project aims to study how the moon formed, its interior composition and why the side seen from Earth looks so different from the "far side," which isn't as dark because of lava flows, Zuber said.
"Clearly we don't understand what is happening inside the moon," she said.