The above article explains how long it will be before we start to see the early signs of impact from the “stimulus” bill. Read it, and if you thought the priority was fixing the problem BEFORE you lose YOUR job…. you may want to weep (unless you work for government.) In short: the "stimulus bill" will take months before having any effect, and OVER two years before we’ll see the unemployment rate begin to decline.
Why do we continue to deny the obvious? There is a simple alternative that is clearly better:
Borrow the TRILLION as planned, but use it to cover the ENTIRE cost of FICA taxes for a year.
A FICA tax holiday would immediately add 7+% to each employee’s take home pay. For half the cost of the “stimulus”, every worker could have back his/her share of the FICA tax, leaving him/her over 7% more to spend to "stimulate the economy". This type of FICA tax holiday would distribute a half-trillion dollars to the roughly 170 million workers. That averages nearly $3000 per worker over the year.
Compare that with the $500 the current stimulus will provide you as a bonus on your tax refund when you receive it, NEXT YEAR.
Further, the "employer’s share" of the FICA tax equals another 7+% of each employee’s pay that your employer must send to the government. That adds up to another half-trillion. A FICA tax holiday would cut the labor costs of EVERY BUSINESS in the country by 7+% per employee. This would mean that businesses could remain in business and KEEP the jobs of MILLIONS of employees, and the better companies may even be able to hire more employees! Foreclosures would go down because employees would be able to keep their jobs and make their payments!
But no, our congress would never go along with a year long FICA tax holiday.
Give some of the money back to the people who earned it? And to the employers who hired them? NO WAY! Our congress needs to buy votes! THEY need the money. THEY need to decide where the money goes… why else would we contribute to their campaigns and think they are important??? It may lead to some fraud and abuse, but that’s the cost of using bureaucrats and politicians to decide “quickly” how stimulus money should be spent. Yea, sure.
It is TRUE that some of the current “stimulus” goes to pay unemployment benefits and the salaries of government employees. But we wouldn’t need more money for unemployment or for government employees IF THE ECONOMY WAS REVIVED! Employees would be working and taxes would be coming in again, filling the coffers of the governments, paying for their employees.
It seems congress would rather set aside money to pay for unemployment benefits for people not yet laid-off than to spend that money saving those people’s jobs!
I may have some details in the above analysis wrong. In particular, I did my calculations based on the 2007 actuarial report by the Social Security trustees. Certainly there are minor differences that would require more or less borrowing or a shorter tax holiday. Regardless, the idea should be discussed seriously.
But, hey, I actually can figure out how to pay ALL my taxes! That’s better than the Secretary of the Treasury and an ex-Speaker of the House. But if I’m wrong… RESEARCH IT AND PROVE IT! I’d LOVE to think the leaders of our country know what they are doing. I await your corrections!