Here It Comes: Obama Considering Another Fiscal Stimulus
It just never changes:
- OBAMA AIDES SAID TO DISCUSS EMPLOYER PAYROLL TAX BREAK
- PAYROLL TAX BREAK FOR EMPLOYERS AMONG IDEAS TO BOOST HIRING
- ADMINISTRATION CONSIDERING MEASURES AS RECOVERY SLOWS
Bolded bullets aside, good luck passing another fiscal stimulus Dear President when you can't even issue debt without stealing money from government retirees.
President Barack Obama’s advisers have discussed seeking a temporary cut in the payroll taxes businesses pay on wages amid economic reports suggesting the recovery is slowing, according to people familiar with the matter.
The idea, in preliminary stage of discussion, is among several being debated in the administration with the aim of boosting hiring, the people said on condition of anonymity to discuss internal deliberations. The unemployment rate in April rose to 9.1 percent, the highest level this year, and the economy is a main focus of the political debate in Washington.
The discussion reflects the political constraints the White House is operating under with the Republican majority in the U.S. House pushing to cut federal spending. A hiring stimulus based on a tax break for employers may have an appeal to Republican lawmakers, many of whom have called for measures to help businesses.
A temporary break in payroll taxes also would echo a centerpiece of the deal Obama and congressional Republicans reached in December 2010 to extend tax cuts enacted during the presidency of George W. Bush. That package included a 2- percentage-point reduction in employee contributions to the payroll tax during 2011. The tax finances Social Security and Medicare and is divided between portions paid by employers and employees.
Obama said at the White House yesterday that he’s interested in “exploring” with lawmakers from both parties extending some of the stimulus measures that were part of the tax cut package “to make sure that we get this recovery up and running in a robust way.”
The people familiar with the discussions would not characterize how seriously the idea is being considered or whether it’s moved beyond initial discussions. Other ideas that have been discussed -- and rejected, according to some administration officials -- include a temporary holiday on corporate taxes on repatriated foreign earnings.
And what permawrong Wall Street aparathick lemmings gets quoted? Why the man who had the NFP number off by 300%+ Joe Lavorgna of course:
In an analysis released shortly after the December 2010 tax-cut deal, Deutsche Bank Securities economists Joseph LaVorgna, Carl Riccadonna and Brett Ryan estimated that the employee payroll tax cut would boost gross domestic product this year by an additional 0.7 percentage points.
Enter another speechless moment, especially since it was yesterday that we discussed just how worthless the first $787 billion fiscal stimulus really was:
and a half years ago, Christina Romer, then still employed by the Obama
administration in the position of Chair of the Council of Economic
Advisers penned "The Job Impact of the American Recovery and
Reinvestment Plan" - a report predicting the impact of a fiscal
"stimulus" that took out $787 billion from the pocket of American
Taxpayers (subsequently discovered to cost even more)
and put that money...somewhere. We are not sure where, because
according to a chart now made legendary for its complete failure to
predict the future, it sure did not go into creating jobs. Below we
present the original chart that made the January 10, 2009 presentation,
and superimpose upon it the reality of the past two and a half years. It
is simply stunning. And while we are here, and discussing the abysmal
failure of QE2 (the impending arrival of QE3 notwithstanding), it is
amusing to hear the whimpering of the likes of one Richard Koo, who is
now claiming that all along the money from the Fed's monetary stimulus
should have been invested in the form of a fiscal one. Well, Dick, below is the impact of your fiscal stimulus....AND it also includes the impact of $2 trillion in incremental monetary stimulus. Combined, both
fiscal and monetary stimulus has now missed the worst case projection
for US unemployment for 30 months running. Here is the simple truth:
both monetary and fiscal stimuli are abysmal failures, when the economy
is mean reverting to a state where it was hijacked from courtesy of 30
years of "great moderation" - and there is nothing that can be done to
stop it. Correction: there is one thing - the Fed can destroy the dollar
in its attempt to disprove simple physics. And, ultimately, it will.
From the original ARRA proposal:
And the outcome: