The Unorthodox Politics Of The Payroll Tax Reduction

by Maisie Allison

Joseph Lawler refutes Bruce Bartlett's case against extending the payroll tax cut (surprisingly, Bartlett's with congressional Republicans on this one): 

[A payroll tax cut] would put money in the pockets of the most liquidity-constrained workers. The payroll tax falls heaviest on low-income workers, many of whom, Republicans are increasingly fond of reminding us, pay little or no income tax — meaning that income tax cuts won't help them. And while it may be true that the recipients of the payroll tax rebates will save the funds instead of spending them, it's not clear to me why exactly it's so much more desirable to have people spend money rather than pay down their debts. The sooner households can crawl their way out of indebtness, the sooner consumer spending will rise.

Steve Benen sympathizes with Bartlett's logic but concludes that given political circumstances, the tax break represents a tactful approach to modest fiscal stimulus.