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

Film & TV

A Right-Wing Halloween

‘The world is not a dark and evil place,” insists an exasperated woman played by Judy Greer in Halloween. “It’s full of love and understanding!” I put the question to the class: Is she right? In the new film (not a reboot but a sequel that occurs 40 years after the events in the 1978 original and ... Read More
Politics & Policy

The Blackface Party

I must have missed something: Was there some kind of all-hands white-people meeting at which we voted to kick the Democrats out? Elizabeth Warren, Rachel Dolezal, Beto O’Rourke — what’s up with all the ethnic play-acting? Isn’t cultural appropriation supposed to be a bad thing among progressives? Isn’t ... Read More
Elections

The State of the Race for the House

Way back in January, I went through the then-34 seats where a Republican incumbent was retiring and concluded that most were in deeply red districts and not likely to flip to Democrats. Pollsters and media organizations are less inclined to conduct surveys of House races, both because there’s less public ... Read More