Update: We wrote this post earlier prior to having seen credible estimates that the payroll tax holiday could add 0.7% to GDP, which only makes it more maddening that it wasn’t adopted earlier
Original post: Yesterday Obama announced that as part of the “framework” on taxes, US workers would get a 2-year 2% payroll tax holiday.
Essentially every worker in America just got an instant raise.
What’s remarkable, or really unconscionable, is that it took so long to make this move.
Whether that money goes towards more spending or paying off debt, it’s a plus. There is a drawback in that it puts pressure on Social Security, but that’s no different than any other stimulus tax cut measure that has to be “paid for” at some point down the line. That it impacts Social Security specifically is really just an accounting artifact.
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