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Posted by on Jan 24, 2010 in At TMV | 5 comments

The Tragically Missed Economic And Political Opportunity

Democratic Party policy-setters are overly smart people. In consequence, they have a gift (of sorts) for avoiding the obvious. There was an easy way to give a dramatic and effective boost to the economy; one that would not have cost more than the cumbersome and half effective policy chosen; one that would have been viewed very favorably by most Americans and mightily helped the party’s own popularity; and wonder of wonders, one that would also have gotten the support of many Republicans.

Being Democrats, of course, they missed this opportunity. For historical purposes, however, it’s worth noting it here anyway. I speak of a one-time, one year Payroll Tax holiday.

An undersized bit of such a holiday was part of the Democrats’ stimulus bill that was passed last year with a price tag of nearly $800 billion. Since a one-year Payroll Tax holiday would have cost about the same $800 billion, let’s see what it might have been achieved compared to the stimulus package that actually became law.

First, let’s look at the economics of the two approaches. The stimulus that actually became law included a mini-Payroll Tax provision that gave the average American worker $13 more a week to spend. Had the entire 7.65 percent Payroll Tax (including Medicare) been suspended for a year, the average worker would have taken home about $55 dollars more a week — a huge infusion of new spending would have surged through the entire economy, and more credit cards and mortgage payments would have been made benefiting stressed lending institutions. And the effects of this extra spending/repayment would have been been focused, immediate, not spread over years and pet programs as the stimulus package actually passed is doing, making its many good effects easy to appreciate by most people. Oh, and by the way, since the Payroll Tax is also assessed on employers, on businesses, it would also have allowed them to hire more people (or lay off fewer), and even make them more credit worthy so they would qualify for more loans from banks.

Then there would have been the politics of a Payroll Tax holiday approach. This being the most regressive tax on the planet, a Payroll Tax holiday would have pleased the left mightily. Because it’s also a straight out tax cut that would also benefit the well-to-do, and the cut also applied to business, it would have gotten at least some bipartisan support. Americans generally would have seen that a new Democratic Administration was moving quickly and dramatically to improve their own lives. They would therefore have been more likely to back the Administration’s health care reform.

Oh well, as a poet one noted: “Of all the sad words of tongue or pen, the saddest are these: ‘It might have been.'” The simple truth is that the Republicans aren’t afraid to act aggressively to advance the interests they support, and they know have to shift blame for their own failures to the other guy. Democrats, on the other hand, don’t know how to move aggressively on anything of importance, and don’t know how to avoid getting blamed for everything. That’s why a party whose policies I generally dislike can govern, and a party I thought represented what I want can’t seem to govern at all.

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Copyright 2010 The Moderate Voice
  • Silhouette

    It’s funny the points you make about the dems not getting it up to wield the power they have. They’ll spend hundreds of millions on campaigning. They’ll get jet-lag from endless excursions stumping. They’ll have speeches, make addresses, have brainstorming sessions, posture, pontificate and so on to the point of where I’m exhausted for them just watching it all. And yet take one afternoon in the session hall of the Senate where all they have to do is stand shoulder to shoulder and look the GOP in the face and tell them to have intercourse with themselves and you’ll see them run for cover as if you’ve asked them to do the hardest thing in the world.

    The worst thing that could happen to them is death. No, wait, since all of us will die anyway, the worst thing is for them to die having allowed our country to dissolve on their watch. So the priorities are clear. Slam medusa in the head with a sledgehammer so that the dems fear of her death stare will no longer paralyze them.

    Like I said before, that putz over in Mass was elected as a protest to the weaker candidate. It is as if [and this is true] even liberals will vote in someone seen as powerful [albeit otherwise totally objectionable] over a waffling idealist who never gets anyting done. At their gut level, voters want a powerful leader. It’s in our DNA, no matter what our mouths are spewing our monkey-genes want to see aggression. This perfectly explains the Mass. election results. They wanted their Lion back.

    Do the late Ted Kennedy a solid and all of you dems become “lions of the left”. If you do you will save millions upon millions of dollars [speaking of economics] in this election year because you will have won the even the subconscious respect of the liberals as well as the overt respect of independants…in other words, the election. Independants by and large are nothing more or less than just democrats who are sick of weak leadership.

    If Obama’s State of the Union address features one more scene of endless promises and mock-anger with a stern Joe Biden looking over his shoulder as if to say ‘we really mean it”. I’m snapping off the TV and planning how to campaign for the GOP next Fall. I mean it. I’ve had it and so has everyone else I’ve spoken to nearly as far left as I can find. We elected you people to GET THINGS DONE!!! Don’t work with the GOP anymore..any of them, even the “moderates”. Tell them where to stuff it and mean it. Use reconciliation. They did! Do exactly what they would do with a 59-41 split and not one iota less.

  • Silhouette

    Here’s what one of their blogging clones wrote on another site about Obama and the state of our country. Talk about letting the cat out of the bag..lol
    *******
    “Our best hope is that Obama is sufficiently emasculated to get out any of his terrible agenda and that Congress remains too scared to act to make things any worse than they are right now.”
    *********
    Kid you not..

    So I translated it for laymen and lame-men to decipher:

    ******
    “Our best hope is that Obama is sufficiently scattered enough with too many vital issues of disaster left to him by Bushco to get out any legislation that disrupts the GOP entrenched foothold on behalf of supercorporations and that Congress remains too ignorant of the 14th Amendment to overturn the SCOTUS enforceability and render our rich corporations inable to continue to wholesale buy elections and stuff Congress with their goons”
    ******

    = )

  • Silhouette

    Just watching Fixed News, the official propaganda outlet for the GOP’s strategy to see Obama fail. They recommended that Obama “stay calm” and “focus on the economy” in his address.Ergo, Obama should “fire up” and “only briefly cover the economy” while meanwhile focusing on the SCOTUS ruling, how sneaky it was and how it’s the GOPs strategy to undermine the people. Also he should focus on the retooling of our current and costly ER/medicaid universal healthcare into a streamlined and cohesive unit that reaches the same number of uninsured for less money. Everyone can get behind saving taxpayer dollars. We don’t need to subsidize wasteful private insurance with taxpayer dollars by giving them our uninsured. We need to trim costs by insuring our own without need to advertise and pay executive bonuses beyond check.Also of interest and of peculiar timing, Wallsmart lays off thousands of workers just in time to urge the president to focus on a diversion. Again I say, reassure americans briefly about the economy and ATTACK the GOP for its attempts to undermine democracy via their five stooges over at SCOTUS..

  • HilarySmith

    Free trade is destroying us. We need to be rethinking the value of our trade agreements when those agreements end up forcing American workers to compete against five-year-old orphans in Third-World countries. I’m surprised at how little conversation I’ve seen about our trade policies. Trade is everything.

  • DLS

    I’m not worrying about the whining and class envy underlying so much sentiment about the payroll tax.

    Just look at Zandi’s bang-for-the-buck list, which I’ve done since he started presenting it so long ago.

    http://www.econbrowser.com/archives/2008/10/pocketfull_of_m.html

    That’s how to view it.

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