Charles Krauthammer Schools Margaret Carlson on Payroll Tax Holidays
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.
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Comments
Empirical Study on Temporary Income Supports Charles' Position
Submitted by WhosJohnGalt on Sat, 12/24/2011 - 9:26am.
Milton Friedman did a study of behavior of those who received temporary vs per permanent income increases and the conclusion was that temporary income was typically "saved" while permanent income was "spent". Can any CPA effectively understand a tax policy that changes like the weather , how could everyday americans be expected to understand it ?
I've got to admit,
Submitted by bkeyser on Sat, 12/24/2011 - 9:47am.
I honestly thought that when liberals say "the SS tax holiday and unemployment benefits stimulate the economy," I thought they were just talking to their illiterate base; I had no idea they actually believed it. But listening to Ms. Carlson, it sounds as though she is earnest in her belief that $20/week in less withholdings for someone making nearly twice the US median salary income would actually have a national economic stimulative effect. I'm guessing she believes the broken window fallacy too.
I assume the employers contribution is also reduced, correct? If so, does an employer who's running a skeleton crew hire more employees with the savings?
If an employer has 5 employees earning $50k annually, each employee will see a $20 per week reduction in his SS tax. That money still ends up in the employees paycheck, so there's no net payroll saving to the employer; only his contribution to FICA is reduced. So in the end he's got $100/wk for two months extra for hiring. Essentially, it would take 50 employees earning $50k/yr to save enough in the employer's contribution to SS to hire one employee at that same salary. (I'm using $50k because that's the figure the White House is using to arrive at the "$1000 per year extra in their pockets" meme.) So essentially, this could possibly, maybe, create one job per 50 existing jobs by large employers. Or, the greedy bastards could pocket the money.
I wonder why the left would champion an idea that could simply further enrich the 1%?
Right you are, Bob
Submitted by Cool Arrow on Sat, 12/24/2011 - 9:58am.
Here I am, getting periodic updates from the Federalo Government, telling me how much Social Security I'm going to get when I retire, and I'm thinking "How the heck is it a tax if I'm going to get it back, and probably more than I put in"?
I put money into my 401k, and I don't call that a tax either.
401k
Submitted by mang on Sat, 12/24/2011 - 3:19pm.
Union members call it a tax. Here in Ohio, issue 2 would have meant gubment employees would have to contribute more to their retirement, like the rest of us in the real world, but they kept calling it a tax.
No, Incorrect
Submitted by BigAlSouth on Sat, 12/24/2011 - 12:24pm.
You assumed: "I assume the employers contribution is also reduced, correct?"
No, employers still "contribute" their share, 6.2%. Only the employee reaps the largess of the two month Obama Give-away Holiday. (I know, I know. Boehner wanted to extend it 12 months)
http://taxes.about.com/od/payroll/a/Reduced-Social-Security-Withholding-...
It will stimulate the economy
Submitted by motherbelt on Sat, 12/24/2011 - 10:09am.
It will stimulate the economy the same way (as Nancy Pelosi said) extending unemployment will create jobs.
It's all in the application of Nancy-matics
Submitted by Galvanic on Mon, 12/26/2011 - 5:39pm.
Pelosi insists that paying unemployment benefits to the jobless is the BEST way to stimulate the economy because "macroeconomists tells us that every $1 paid out in unemployment creates $2 in the economy." (according to the former Speaker of the House).
It's this kind of idiocy that helped get us into $15 trillion of national debt.
You have to understand that
Submitted by ant on Sat, 12/24/2011 - 11:03am.
You have to understand that the positions of those, like Maggie Carlson, come from the view that Americans are mostly knuckle-dragging rubes. And that even a 'gift' of $20 extra dollars of our own money from our magnanimous rulers will be hastily spent on Bibles, booze, strippers, and scratch tickets...thereby, somehow boosting the economy. Behold Smart-power.
More like...
Submitted by StarAZ on Sat, 12/24/2011 - 1:25pm.
I was thinking fries, ammo and dog toys. You know how much dogs await Christmas. I am self-employed, so this is nothing to me... Bread and circuses--and we just buy in and discuss ad infinitum while our "betters" laugh their sushi-filled butts off!
The difference is that Charles would...
Submitted by zenman1661 on Sat, 12/24/2011 - 11:08am.
say the samething no matter if a Republican or Democrat was president. Carlson would only say the cut was helping if the president was a Democrat.
Exactly ...
Submitted by Tom Blumer on Mon, 12/26/2011 - 2:39pm.
... remember the "Diet Coke a day" whining in the early 2000s?
Any truth?
Submitted by desert3030 on Sat, 12/24/2011 - 11:31am.
If I assume the Lib's are correct. On a annual wages earner of $30 thousand the "savings is roughly $25 to$35 per pay check. Now let me see that is 3/4th's of a carton of smokes. Or 1 1/2 cases of beer. Less than a tank of gas for a SUV.
And better yet....50% plus of 99 don't pay taxes so this is a bonus plus. One day I hope to see a Republican with nads stand up and say no,,,,and stick to it. I am tored of apprsiers running for office.
How odd....
Submitted by Willis_Leon_Johnson on Sat, 12/24/2011 - 11:48am.
I did not know, or realize. that a person with the near zero intellect of margaret carlsons ilk could actually take an IQ rating below zero.
End 'gun violence in America' - Require training and MANDATORY "Shall Carry" by every Citizen.
If harry reid is the best person to lead the senate, what does that say about the other 99 senators?
Okay I gotta go against the
Submitted by mang on Sat, 12/24/2011 - 3:28pm.
Okay I gotta go against the grain on this. I think there are 2 different points being talked about here. While preventing a $40 tax hike won't magically fix the economy, it's Econ 101 that more money in the hands of spenders will result in more money being spent. If that $40 per month is taken away, the economy will certainly suffer. If more money is being spent, more jobs are still there to take that money.
That's quite an over simplification.
Submitted by almostacowboy on Sat, 12/24/2011 - 4:08pm.
$19 and change per week is not some "windfall" that would enable the average person to buy a car, a fridge, or even a decent DVD player. More than likely it will only lessen the pain of paying their grocery bill, cable bill, or gas for their car.
I think that most of you are
Submitted by MikeB on Sat, 12/24/2011 - 6:02pm.
I think that most of you are missing the point. Social Security is already running at a deficit, so this tax reduction is only exacerbating the problem with Social Security. Also, this is not really a tax holiday so the peasant class can have more money to spend. Not publicised in the bill is the fact that it is "paid for" by a "temporary" additional fee on home mortgage holders who either buy a new home or refinance after January 1. So, any workers who happen to buy a house or refinance may get a $20 increase in their takehome pay, but will have to spend that and more in the form of the "temporary" fee added to their house payments. And, when has there ever been a truly temporary income source in Washington? We're still paying the "temporary" excise tax that the government imposed to pay for World War 1!
While I will agree with your
Submitted by ThePickle on Sat, 12/24/2011 - 4:28pm.
While I will agree with your basic premise that more disposable income will tend to be spent and if those conditions are maintained for a significant amount of time this increased consumer demand could lead to an expansion of existing business' and as such, an increase in jobs.
However this specific example will be absolutely meaningless to the economy as it is neither large enough nor sustained enough to begin to fuel economic expansion. While even a year of payroll tax relief may not have been large enough, or sustained for as long as needed to overcome our present economic situation, it would have been a damn site better than allowing this preening peacock of a president and his fawning sycophants in the media to proclaim a "victory".
I know, it makes me sick
Submitted by mang on Sat, 12/24/2011 - 5:22pm.
I know, it makes me sick seeing the media boasting of a "win" when it's just an illustration of the sad state we're in. For people like me that are living paycheck to paycheck, $40 per pay is pretty big (not to mention the health insurance hike we're going to see next year). Both parties like to hold us over the edge of the cliff and I wish they would all get voted out. We need citizens to run this country, not politicians. That's why I had so much hope for Herman Cain before he was virtually assassinated by the powers that be.
Hi. How are you on this fine day.
Submitted by The Vet on Sun, 12/25/2011 - 12:42pm.
People receiving $40 per paycheck extra as a result of the payroll holiday are not living paycheck to paycheck. $40 per paycheck assumes the maximum amount of money that people can pay into the SS, $101,000. 101,000 divided by 52 = $1942 a week. 2% of that is $38.84. Most people, including those living from paycheck to paycheck will get far less.
Hi Vet. The news said (lol,
Submitted by mang on Mon, 12/26/2011 - 12:38am.
Hi Vet. The news said (lol, I know, I know) that it's someone earning $50k per year would be hit @ $40 per pay. Perhaps they're assuming a married couple, both earning $50k? It wouldn't surprise me that they left that out to pad the numbers.
Probably meant every 2 weeks
Submitted by amyshulk on Mon, 12/26/2011 - 12:51am.
Probably meant every 2 weeks - people still get paid weekly???
Ronald Reagan
By the by everybody.
Submitted by The Vet on Sun, 12/25/2011 - 1:00pm.
Someone needs to correct me if I am wrong here. I am not a tax consultant.
The 2% tax holiday? You just not paying the 2% to Social Security. That means the money will go to your normal income. On top of what you already make. So that means the money will be taxed at your normal income rate, your top normal income rate. $101,000 income prolly means 25% or more. So that $40 shrinks to $30 for the people that make more than the cap.
Good morning Vet
Submitted by cocodrie on Sun, 12/25/2011 - 1:08pm.
Don't forget you're talking about the party of Plugs where JOBS is a three letter word.
Have a blessed Christmas and a blessed year.
Alton
Jesus Loves You so much He died for you
We can use the extra money for gas.
Submitted by drsamherman on Sat, 12/24/2011 - 4:17pm.
Yes, "Marcie" Carlson, the few extra bucks might pay for a few gallons of gas for us if your boy toy Zero decides to go for the pipeline.
The R's messed up - they
Submitted by amyshulk on Sat, 12/24/2011 - 4:53pm.
The R's messed up - they should have been against this from the start, allow the 2 month vs the 1 year, and say "The D's want to decimate SSI funds, we want to flatten the tax base overall" and then get C's in at all levels to implement it!!!
All this nibbling at the edges just exposes the truth - you can't fix a broken system!!!
Ronald Reagan
I love it when Krauthammer does this
Submitted by Marcus Porcius on Sat, 12/24/2011 - 7:02pm.
I just wish he'd give Boehner some lessons too. Maybe then Boehner would grow a pair and start acting like a Republican.
"Tolerance is the virtue of the man without convictions." G.K. Chesterton
www.theconservativereview.com
2 months at a time, 4 more
Submitted by FishFace222 on Sat, 12/24/2011 - 7:25pm.
2 months at a time, 4 more times means an obammy campaign add that says he "cut" taxes 5 times in the last year. Not exactly true but I have a feeling...
start at home charting your income-
Submitted by JIMMY1660 on Sun, 12/25/2011 - 11:56am.
debits and credits- the $40 is in your pocket-when you chart the other-Obama-care costs.
one gets a better picture what a scum bag liar his is.
Truth is brutally beaten and
Submitted by ant on Sun, 12/25/2011 - 12:20pm.
Truth is brutally beaten and mugged by the left on a regular basis these days. Truth needs to buy itself a firearm. The latest Obama math from the OFA propaganda machine. "$40. a month is $1,000 a year. What would you do with the money?" Uh......buy you idiots a calculator? or a calendar. We are being led by complete asshats.
Margaret Carlson is a liar
Submitted by ckc1227 on Sun, 12/25/2011 - 5:32pm.
"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…"
And when she said that, CK should have said " I want to make it perfectly clear to everyone watching this program that Ms. Carlson just lied to you", because that's exactly what she did. Everyone receiving a tax cut under this plan also received a cut under the Bush tax cuts.
The first thing we need to do
Submitted by ThePickle on Sun, 12/25/2011 - 5:55pm.
The first thing we need to do is to stop referring to these as tax "cuts"....... the two month EXTENSION of the CURRENT TAX STRUCTURE will NOT put any additional monies into the hands of ANYONE!!!!! They will continue to get the exact amount in their paycheck that they have been getting since the payroll tax cut was initially implemented.
Neither you, nor I, nor ANYONE, will see an INCREASE of as much as a single dime in our checks as a result of this EXTENSION.
Your's, mine and EVERYONE'S check will be EXACTLY the same as they were before this EXTENSION of the CURRENT TAX STRUCTURE and this EXTENSION did NOT "CUT" ANYTHING. It merely prevented the EXISTING payroll tax rate from "RISING"!!!!
Ok now that I have metaphorically screamed myself horse lets all repeat it one more time.
This was Not a Tax "Cut"
It merely EXTENDED the CURRENT PAYROLL TAX RATE.
You WILL NOT get any additional monies in your check as a result of this EXTENSION
The EXTENSION merely prevented the CURRENT TAX RATE for RISING.
Later, Carlson was heard
Submitted by ljacone on Tue, 12/27/2011 - 11:40am.
Later, Carlson was heard shouting "Stop clouding the issue with facts!"
Moron.