Unlike handing a bunch of dough over to folks who already have a bunch of dough, putting dollars in the hands of people who will spend it is the smartest way to get money into the economy.
One fine way of accomplishing that is to up everyone”s take-home pay by cutting payroll taxes. Nouriel Roubini has an op-ed at the Post today suggesting using the proceeds from allowing the Bush tax cuts for those making $250K and up expire to fund it.
This strategy has the added advantage of reducing costs for businesses, which, Roubini argues will help with job creation and retention.
A much better option is for the administration to reduce the payroll tax for two years. The reduced labor costs would lead employers to hire more; for employees, the increased take-home pay would boost much-needed economic consumption and advance the still-crucial process of deleveraging households (paying down credit card debt and other legacies of the easy-credit years).
As someone who has actually had to meet a payroll, I can tell you that cost per employee is a very real number in figuring out staffing levels.