Here is Charles Krauthammer’s summation on the House Republicans’ performance on the payroll tax holiday.
The GOP’s performance nicely reprises that scene in “Animal House” where the marching band turns into a blind alley and row after row of plumed morons plows into a brick wall, crumbling to the ground in an unceremonious heap.
With one difference: House Republicans are unplumed.
I can go with that.
It is still a little demoralizing to see Krauthammer engage in the kind of myopia on stimulus the Republicans are becoming famous for. He argues, in a seemingly convincing manner, that no businessperson is going to hire someone just because of a two-month or one-year payroll tax holiday. Here’s how he puts it:
Obama is also selling it as a job creator. This takes audacity. Even a one-year extension isn’t a tax cut; it’s a tax holiday. A two-month extension is nothing more than a long tax weekend. What employer is going to alter his hiring decisions — whose effects last years — in anticipation of a one-year tax holiday, let alone two months?
This is a $121 billion annual drain on the Treasury that makes a mockery of the Democrats’ reverence for the Social Security trust fund and its inviolability.
Here’s the problem. It isn’t just a $121 billion drain on the Treasury. It’s a $121 billion stimulus package. And it’s not just an extension of the payroll tax holiday; it’s also an extension of unemployment benefits. It puts a lot of money in people’s hands. Or, more accurately, it puts a little bit of money in a lot of people’s hands. This will translate into lots and lots of small transactions that would not have taken place without the bill. And that means more revenues and more profits for countless businesses. Unemployment insurance is the most effective stimulus known to man, because almost all of the money is spent immediately. And increased demand and increased profits opens the door to more hiring.
So, no, people aren’t going to hire someone because they have to change their payroll withholding formula. They’re going to hire people to meet increased demand and they’ll pay for it with increased profits. This will create economic growth, and the government will get a lot of its money back as a result.
This is what’s missing from all Republican rhetoric about creating jobs. They think rich people will hire people if they have more money. But they won’t hire people unless they have customers with money to spend. Letting the rich hoover up ever cent of wealth created in this country has resulted in an economy where the rich are richer than ever but no one else has enough money to keep the wealth machine growing.
On the politics, I agree with Krauthammer. The Republicans have acted like morons. But he isn’t any better than them when it comes to the substance.
Also, too, the bill doesn’t cost Social Security a dime.