Nobody’s Talking About The Most Important Part of the Fiscal Cliff

My column argues that instead of the Bush tax cuts, the part of the fiscal cliff we should be really worried about is the expiration of the payroll tax holiday.

Letting this happen is nuts. If anything given continued high joblessness and the very very low interest rates we ought to be both extending and deepening the holiday. Cutting the worker-side tax rate even lower and adding an employer-side cut. Given today’s economic conditions, it’s substantially cheaper to finance government operations with borrowing than with labor taxes.