It may well be that the best we can do under the circumstances is to focus on changing the campaign finance laws to eliminate government capture by a wealthy minority. This would at least allow those representing our children to be able to peacefully implement the wealth, estate, and income taxes that will be so desperately needed when their generation becomes more powerful (while simultaneously becoming more desperate as well). Those that think the youth of today are going to quietly accept and go along with this “inheritance” of trillions of dollars of wealth and income concentrated among a very few, huge government debts, worn out infrastructure, uncontrolled & ridiculously high health care costs, declining real incomes for the poor and middle class, the tremendous retirement costs associated with a rapidly aging population, costly cleanup of neglectful environmental policies, unprecedented competition from abroad along with unprecedented environmental and resources challenges etc., etc., either don’t have kids or is no longer listening to them; or maybe they’ve raided their kid’s stash and are smoking something very powerful, who knows.

It really helps when you’re driving to pick up your head once in a while and look down the road a bit. Maybe you can avoid a disaster or two that you really didn’t see coming by being so focused on the first 30′ in front of your car.

My concern is that we not over estimate the jobs impact of these tax cuts when better options exist for what little stimulus spending we will ultimately get. It plays into the hands of the “stimulus doesn’t work” critics and doesn’t get the $’s to those most in need. The effects on the economy don’t depend much on who first puts the money in circulation, only that it ends up there; so cycle it through those that need it the most (who are the same people that will simultaneously give us the “biggest bang for the buck).

Perplexed, you are right that the results are dependent on my assumption of how the payroll tax holiday maps into GDP spending. But at least I showed my work – the dependence is linear. If we instead assume the 1.25 multiplier Zandi used, and your 50% number, we get 500,000 jobs. I tend to think that Zandi is well aware of the propensity to save that various income groups have, and so at least some of your objections are already included in his estimate. Of course, I have no way of really knowing this. Perhaps I am naive.

My guess is your conclusions are very sensitive to this unrealistic assumption. These tax breaks are heavily weighted to the higher end of the income scale – many of whom are in under-water mortgages and facing “balance sheet recession” problems. A very significant proportion of these tax breaks will be used to pay down debt. With no other knowledge of the real number, a better estimate of the spending portion would be 50%, and that may be too optimistic. The only ones left with a “high propensity to consume” are those at the low end of the income scale. We need to get whatever stimulus is available to them as they need it the most and we get the most “bang for the buck.” There is just way too much of what is promoted as “stimulus spending” going to pay down debt & de-leverage. The savings and de-leveraging amounts have no stimulus effects, at all, add to the deficit, and only feed disingenuous arguments that “stimulus doesn’t work.”

Its too bad that were in such a desperate situation to get any stimulus at all but we should at least be pushing to put whatever we can get to where it will help the most. Tax breaks for high paid workers isn’t that place – that’s why the republicans are most receptive to this alternative. When they’re done it will probably be all that’s left.

http://research.stlouisfed.org/fred2/graph/?g=27D

I understand (somewhat) Okun’s Law and again my humble opinion with the current economic situation it shouldn’t be used at all.

When productivity and demand drops like it has there is so much “slack” in the economy that unless you create a significant jolt the unemployment needle will not move.

But of course the best test will be if the reduction passes. If I were working with the republicans I would tell them to pass it asap simply becasue I believe it will have the least impact on the economy.

IMHO, payroll tax cut is almost assuredly spent so equal to direct government spend 1.4X multiplier

Bush tax cuts predominantly favored the wealthy, so 0.7X (or worse).