Job-Creating Plan That's Not in Democrats' Playbook
NOVEMBER 30, 2009.
Democrats who have spent the last two years castigating capitalism for its failures are unlikely to embrace much of Michael Boskin's free market-oriented, "common-sense recipe for more and better jobs" ("An Alternative Stimulus Plan," op-ed, Nov. 18). However, Mr. Boskin's recommendation of a one-year partial payroll tax cut may very well have bipartisan appeal. Most Democrats despise the regressive nature of Social Security and Medicare taxes (everyone pays the same percentage of income, up to a maximum wage base of $106,800 for Social Security) and any cut in payroll tax rates would be welcome.
The Democratic end game then would be to make the tax cut permanent for lower-income workers, while replacing the lost revenue with tax surcharges on higher-income earners and with removal of the wage base tax cap.
Sen. Harry Reid has floated the idea of adding a progressive feature to the Medicare tax, assessing a 1% surcharge on higher incomes to help pay for the Democratic health-care bill.
A temporary payroll tax reduction, along with several other ideas set forth by Mr. Boskin (e.g., a post-crisis government retrenchment plan, wind down of TARP, delay or abandonment of energy and health-care legislation, etc.), would help stimulate private-sector job creation, but that package of reforms is not in the Democratic playbook.
If the payroll tax reduction is the sole economic stimulant, it'll be far more effective than another round of government stimulus spending; however, it'll also nudge the door open for long-term, detrimental changes in entitlement tax policies.
Another short-term stimulant that has the potential to morph into a long-term retardant may not be advisable, even if it's the most rational and effective alternative for producing immediate economic benefits.
Paul Roberts
Jacksonville, Fla.
I believe Mr. Boskin's proposal has great merit but can be improved by making it deficit neutral over the longer term.
Why not pay for the proposal by coupling it with a reduction in future Social Security benefits? This could take the form of either reduced cost-of-living increases for a few consecutive years or a gradual increase in the retirement age.
After all, if one reduces contributions to any other savings plan for a short period of time, he can expect either smaller future withdrawals or a later age before making scheduled withdrawals.
Furthermore, this balanced approach will provide a strong signal to credit markets of our nation's fiscal resolve, hopefully resulting in a stronger currency, less inflationary pressure and lower long term interest rates. Perhaps the short-term cost could be financed by the Fed with a quantitative easing program.
Robert J Mangialardi
Nashville
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