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Thread: Obama Team Eyes Employer Payroll Tax Break

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    Obama Team Eyes Employer Payroll Tax Break

    From Bloomberg.com:

    President Barack Obama’s advisers have discussed seeking a temporary cut in the payroll taxes businesses pay on wages as they debate ways to spur hiring amid signs that the recovery is slowing, according to people familiar with the matter.

    The idea, which is in preliminary stages of discussion, is among several being talked about at the White House as the economy holds center stage for the administration and Congress, the people said on condition of anonymity to discuss internal deliberations. The unemployment rate in May rose to 9.1 percent, the highest level this year.
    Obama Team Eyes Employer Payroll Tax Break - Bloomberg

    That the White House is considering another round of stimulus is not too surprising given the persistent high rate of unemployment that is threatening to bump up against the 2012 electoral calendar. IMO, this stimulus should not be adopted for a number of reasons:

    1. It would further exacerbate the nation's long-term imbalances, not just a short-term increase in the budget deficits, as it would increase the long-term unfunded liability associated with Social Security.

    2. It would undermine any credibility of any fiscal consolidation agreement that might be attached to an increase in the debt ceiling.

    3. In macroeconomic terms, it would have only a marginal to small impact. First, the multiplier with such stimulus is well below 1. That means every dollar of this form of stimulus would yield less than a dollar increase in the GDP. Second, hiring depends on expectations about sustained increases in macroeconomic demand that productivity/capital investment cannot accommodate, making it necessary for firms to expand payrolls (a recurring expenditure). Third, companies remain especially risk averse coming out of the financial crisis/recession. Hence, savings from the payroll tax reduction would far more likely be used to bolster cash than to lead to a dramatic increase in new hiring.

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    Re: Obama Team Eyes Employer Payroll Tax Break

    I agree, bolstering cash is all that would occur. Now that companies are running well on over-worked skeleton crew members, why would they change? They might increase production but it would just mean more work for their current employees.

    EDIT: We are fortunately getting many new contracts ATT after quite a few months of little activity. I doubt that we will be hiring, or calling back layed-off personnel to help perform these tasks.
    Last edited by d0gbreath; 06-09-11 at 09:56 AM.
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    Re: Obama Team Eyes Employer Payroll Tax Break

    Quote Originally Posted by donsutherland1 View Post
    From Bloomberg.com:



    Obama Team Eyes Employer Payroll Tax Break - Bloomberg

    That the White House is considering another round of stimulus is not too surprising given the persistent high rate of unemployment that is threatening to bump up against the 2012 electoral calendar. IMO, this stimulus should not be adopted for a number of reasons:

    1. It would further exacerbate the nation's long-term imbalances, not just a short-term increase in the budget deficits, as it would increase the long-term unfunded liability associated with Social Security.

    2. It would undermine any credibility of any fiscal consolidation agreement that might be attached to an increase in the debt ceiling.

    3. In macroeconomic terms, it would have only a marginal to small impact. First, the multiplier with such stimulus is well below 1. That means every dollar of this form of stimulus would yield less than a dollar increase in the GDP. Second, hiring depends on expectations about sustained increases in macroeconomic demand that productivity/capital investment cannot accommodate, making it necessary for firms to expand payrolls (a recurring expenditure). Third, companies remain especially risk averse coming out of the financial crisis/recession. Hence, savings from the payroll tax reduction would far more likely be used to bolster cash than to lead to a dramatic increase in new hiring.
    nicely put.

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    Re: Obama Team Eyes Employer Payroll Tax Break

    Omg, a tax cut to business? Isn't that an evil GOP premise?
    "Hmmm...Can't decide if I want to watch "Four Houses" or give myself an Icy Hot pee hole enema..." - Blake Shelton


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    Re: Obama Team Eyes Employer Payroll Tax Break

    Quote Originally Posted by tessaesque View Post
    Omg, a tax cut to business? Isn't that an evil GOP premise?
    Isn't Obama supposed to be an evil anti-business socialist communist Maoist Stalinist Marxist foreigner?
    Nobody who wins a war indulges in a bifurcated definition of victory. War is a political act; victory and defeat have meaning only in political terms. A country incapable of achieving its political objectives at an acceptable cost is losing the war, regardless of battlefield events.

    Bifurcating victory (e.g. winning militarily, losing politically) is a useful salve for defeated armies. The "stab in the back" narrative helped take the sting out of failure for German generals after WWI and their American counterparts after Vietnam.

    All the same, it's nonsense. To paraphrase Vince Lombardi, show me a political loser, and I'll show you a loser.
    - Colonel Paul Yingling

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    Re: Obama Team Eyes Employer Payroll Tax Break

    Quote Originally Posted by StillBallin75 View Post
    Isn't Obama supposed to be an evil anti-business socialist communist Maoist Stalinist Marxist foreigner?
    Who knows what you think about about Obama....
    "Hmmm...Can't decide if I want to watch "Four Houses" or give myself an Icy Hot pee hole enema..." - Blake Shelton


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    Re: Obama Team Eyes Employer Payroll Tax Break

    Quote Originally Posted by tessaesque View Post
    Omg, a tax cut to business? Isn't that an evil GOP premise?
    I think it's interesting how Obama looks at cutting taxes, and suddenly Bloomberg (the media company, not necessarily the man) thinks it's a bad idea.

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    Re: Obama Team Eyes Employer Payroll Tax Break

    Quote Originally Posted by rocket88 View Post
    I think it's interesting how Obama looks at cutting taxes, and suddenly Bloomberg (the media company, not necessarily the man) thinks it's a bad idea.
    I'm just wondering how they plan on blaming Bush if this doesn't work/work out.
    "Hmmm...Can't decide if I want to watch "Four Houses" or give myself an Icy Hot pee hole enema..." - Blake Shelton


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    Re: Obama Team Eyes Employer Payroll Tax Break

    Quote Originally Posted by tessaesque View Post
    Who knows what you think about about Obama....
    he speaks well like an English Major
    Nobody who wins a war indulges in a bifurcated definition of victory. War is a political act; victory and defeat have meaning only in political terms. A country incapable of achieving its political objectives at an acceptable cost is losing the war, regardless of battlefield events.

    Bifurcating victory (e.g. winning militarily, losing politically) is a useful salve for defeated armies. The "stab in the back" narrative helped take the sting out of failure for German generals after WWI and their American counterparts after Vietnam.

    All the same, it's nonsense. To paraphrase Vince Lombardi, show me a political loser, and I'll show you a loser.
    - Colonel Paul Yingling

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    Re: Obama Team Eyes Employer Payroll Tax Break

    Quote Originally Posted by StillBallin75 View Post
    he speaks well like an English Major
    I <3 English majors! But I don't typically <3 Obama.
    "Hmmm...Can't decide if I want to watch "Four Houses" or give myself an Icy Hot pee hole enema..." - Blake Shelton


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