Two years ago, nearly the entire budget was a canvas for stimulative action. We're left with the payroll tax. The recession made conservatives of us all.
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In a press conference this morning to address the dismal June jobs report, President Obama said he would consider extending his payroll tax cut another year. That tax break, which reduces the Social Security levy on all workers by two percentage points, keeps an extra $1,000 per year in the typical worker's wallet. It represents our last best hope for stimulus in the sputtering recovery.
It also represented one of our first hopes. In February 2009, Sen. John McCain revived an idea from the campaign trail to replace the Recovery Act with another multi-hundred-billion plan grounded in ... a payroll tax cut. Republicans lost that debate. Democrats' stimulus plan instead focused on state aid and a $800 across-the-board tax break called Making Work Pay.
Two years later, Sen. John McCain has faded from the economic news cycle, but his idea has taken center stage. Many liberals, moderates and conservatives agree: a second payroll tax cut might be the only good arrow left in Washington's quiver worth firing.
And so it is that Year-2011 Barack Obama's best shot to help the recovery might be to steal a page from year-2009 John McCain.
The case for stimulus is dead. Who killed it? Some blame the I-95 corridor, the thin artery between New York media and Beltway power, and its obsession with deficits. Some blame the inherent failure of the Recovery Act. I blame the housing crisis.