Here's The Most Radical Stimulus Idea Obama Is Considering

obama, july 2010

Photo: The White House via Flickr

We mentioned earlier how the Obama administration is preparing another stimulus, only you’re not allowed to call it a stimulus, because that phrase has been so sullied politically.Whatever package the White House will put together will include tax cuts and infrastructure projects.

But check this out. According to The Washington Post, one of the ideas being bandied about is a payroll tax holiday. In theory, this should put cash directly into employees’ pockets, as money the government might have otherwise paid to the government goes to workers instead.

If you don’t think it’d be passed on, you’re probably wrong… remember, the cost of an employee to a company is the “all in” cost, which includes benefits, payroll taxes, etc. The allocation of expenses is irrelevant, and if the government got out of the way, it wouldn’t change the total all-in calculation.

Now what’s important is that not just be something that applies to new hires, otherwise it’s arbitrary and uncertainty creating. But as a way of getting cash in lots of folks pockets fast, this kind of proposal would probably do it.

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