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?'"
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Child abuse NEEDS to be our main focus
after all they are our FUTURE society
future police officers
future teachers
future priests
future Mothers
future Fathers
and FUTURE PEPHOLES
I would hope God wouldn't mind if I pray for all those moletes and peps to be thrown into the lake of fire by their victims and loved ones of those victims, for the damage they've done
THE CHILDREN ARE THE # 1 PRIORITY people, don't you think?
Children are wonderful. They are easy to harvest, easy to clean and cook. The sauce is important, something Chinese is most appropriate.
No. Children should NOT be the number one priority. "The children" are NOT our future. A few of the millions of children are our future. Let's focus on the brighter ones and cut our losses on the dead weight. You can usually tell which is which (academically) by the age of 10. Put the little morons to work for pennies on the dollar while the smart ones learn how to lead.
Also, requiring an IQ test to vote would be a step in the right direction. Not everyone SHOULD have the right to vote. Let's face it, many people are too stupid to have a say in how the nation should be governed.
Finally, expanding social services for families that are actually trying to better themselves while letting all of the losers (lifetime welfare collectors) die of starvation would save a little bit of cash.
If you want to shape the future, you need to be very selective of who you allow to see it.
Smells like teen spirit.
WTH is a PEPHOLE?
@Nirvana: A peephole, is a hole in the wall where you can see something of interest. For example, in the 7th grade, we, the boys knew of a secret hole on the wall in PE class or Gym class. We took turns watching girls take a shower, a visual feast when you are in puberty. Then Chriss got caught by the gym teacher and our secret hole was gone for ever.-True story.
Nice story, Cesar, just about every high school has a peephole into the girl's shower. Mine did. But it daid PEPHOLE. What was that, a hole to get Red Bull from?
Duh, I meant said. Silly Nirvana!
I think everyone will hold on to the tax money for awhile. I think Christmas will be light and to the point shopping. It will take till next year for things to get better and another year to normalize the panic. Obama got us pumped, but said we have far to go. He does not candy coat it. We also have to pay our bills, pay credit cards off, and put away some.
You can be certain of one thing ... the underlying problem is worse then they are telling us. Why? Because the Government is very much like advertising - a lie, or perhaps at best a half truth or incomplete truth. Who is responsible for the lions share of creating this problem. Not the average citizen (although they participated). So what does this tell you. Do you believe the Government, the media and the elitists are going to disclose the full truth!?!??!?!??!???
I know what I'm getting for Christmas! How does a Do-It-Yourself Satanic Ritual Kit sound? It's great to have on hand when the Jehovah's Witness weirdos stop by.
@Kitty Carlyle:
What's my line?
Banasy are u still here?
I find a lot of irony or perhaps humor in all this. The Government doesn't make or produce anything including revenue – they get it from the taxpayer. The taxpayer bailed out the banks. The taxpayer bailed out the automakers. So now, it's the taxpayer's money that is going to bail out ... umm ... THE TAXPAYER!!!!!
Although the extra money would come in handy, I think at a time like this, a tax cut is the last thing we need! We as a nation are facing a debt crisis for crying out loud. We should, as a nation, bear the burden equally. Flat tax everybody equally, close loopholes for things that really don't help the nation, open a few that do, and come up with a legit balanced budget. The root of the problem is that its all easier said than done. Politicians up on their hill squabbling, each with their own agenda, corporate america also playing a hand in things, and religous fundamentalists all want their say in how this country is ran. We are so diverse as a nation that nobody can agree anymore. End rant...
Problem is almost nobody on the planet is worth more than...say...$500,000 per year. Consider a large bank might have 1,000 workers making over $1 million. All while the lowest levels are abused and underpaid assuming they want/have a job. I am not talking commie...I am talking old fashioned values that got lost in the 1980's
@Kitty Carlyle:
Yes?
It's about time we bailed out main street. We should have done that instead of bailing out Wall Street.
Problem is massive centralization. Oddly, the first step to change is essentially going back to pre-internet ways. In other words...pull the plug on the Internet and all problems on earth are solved or much-lessened.
Ok banasy and kitty you two are giving away ur age
Next is 'Field to local restaurant'. Basically this: people should generally NOT eat in their homes. It should always be cheaper to get a good meal OF REASONABLE PROPORTION for good price. Whenever and however possible the local produce and livestock should go the restaurants. Subsidize them if necessary.