Like so many of her liberal media colleagues, Bloomberg's Margaret Carlson believes cutting payroll taxes for a short period of time stimulates the economy.
Fortunately for viewers of PBS's Inside Washington, when she tried to make this absurd conclusion Friday, syndicated columnist Charles Krauthammer was there to give her and others on the panel a much-needed education (video follows with transcript and commentary):
GORDON PETERSON, HOST: That anticipates my next question. After two months, what happens?
CHARLES KRAUTHAMMER: Well, they’re going to have two months of arguing over this. They will get the one year extension. It is not a great economic idea. It’s not going to create jobs. Nobody is going to hire, and hiring a person involves a lot of long, it commits a person, an employer, to many years. He is not going to do it on the basis of a one year or two month tax holiday. However, it will pass because there is no way you can make a political argument in an election year against putting money in the pockets of working people.
MARGARET CARLSON, BLOOMBERG: But unlike the Bush tax cuts, it’s a tax cut that could actually help the economy, not because these are people the employers will necessarily hire people, but the tax cut is going to people who will actually spend the money and fuel the economy…
KRAUTHAMMER: The way last year's payroll tax holiday actually helped our economy?
CARLSON: And the hiring the way the Bush tax cuts resulted in?
KRAUTHAMMER: You are saying that it’s going to help the economy. There is no evidence it’s helped the economy.
Krauthammer of course was correct.
Having grown by 3.0 percent in 2010, the Gross Domestic Product with a payroll tax holiday slowed to 0.4 percent, 1.3 percent, and 1.8 percent in the first three quarters of 2011 respectively.
To suggest this short-term cut had any positive impact on the economy belies the facts.
As for employment, through November, less than 1.5 million non-farm jobs have been produced since this payroll tax holiday took effect, which is far less than is needed to just keep up with population growth.
As for the Bush tax cuts, following the implementation of the second round in May 2003, the GDP grew by 2.5 percent followed by 3.5 percent in 2004, 3.1 percent in 2005, and 2.7 percent in 2006.
In the four years following the second Bush tax cut, roughly eight million jobs were created bringing the unemployment rate down to 4.4 percent.
Sadly, such numbers would be meaningless to a shill like Margaret Carlson.