The Agenda

The Payroll Tax Cut and Deleveraging

I’m lukewarm on the tax deal, but I do think that the shift from Making Work Pay to a payroll tax cut looks like an improvement. As Charles Blahous has argued at Economics 21, there is something dangerous and dishonest about how we’re accounting for the revenue loss in the Social Security Trust Funds. But it might help accelerate the deleveraging process.

Given that middle income households have the highest debt-to-disposable-income ratios, the fact that the payroll tax cut will give middle earners more than twice as big a boost to their disposable income as Making Work Pay makes intuitive sense, though of course there are those who consider this a very bad thing.

To be sure, the continuing collapse of housing prices won’t help matters. And as Mike Konczal suggests, it seems that households aren’t clawing their way out of debt by saving more and spending less so much as the most indebted households are defaulting in large numbers.

Reihan Salam — Reihan Salam is executive editor of National Review and a National Review Institute policy fellow.

Most Popular

Culture

Jussie Smollett Changes His Story Again

The actor Jussie Smollett continues to talk about the alleged January 29 attack on him during a frigid night in Chicago, giving Good Morning America his fullest description yet of his claims. It differs substantially from what he told police initially after the alleged assault. Smollett told GMA that the ... Read More
Politics & Policy

We’ll Regret This

Mitch McConnell says the president will sign the budget deal and he will also declare a national emergency to build the wall, as I expected. We’ll see the legal justifications he uses, but as a political and constitutional matter this is a long-term disaster. Oh, it might be good for Trump according to the ... Read More
White House

The Failure of the Deal

EDITOR’S NOTE: The following is Jonah Goldberg’s weekly “news”letter, the G-File. Subscribe here to get the G-File delivered to your inbox on Fridays. Dear Reader (But especially Sammie), I had my say on the emergency declaration yesterday, and I’m sure I’ll have to say it all again not very far ... Read More
Politics & Policy

Capitalism’s Cold War

The story of capitalism since the 1980s has been that of a kind of cold war between capital and politics. In the decade prior, American government was at the nadir of its prestige and credibility. The so-called War on Poverty, launched with great fanfare and idealism in the late 1960s, quickly collided with ... Read More
U.S.

Trump Declares National Emergency to Fund Border Wall

President Trump declared a national emergency on Friday in order to unilaterally appropriate $3.6 billion for the construction of his long-promised border wall. The announcement, made during a televised White House Rose Garden ceremony, came after Congress passed a bipartisan homeland-security-funding bill ... Read More