“…(S)ix times the size of the Making Work Pay tax cut in the president’s 2009 Recovery Act, this would give employers and employees each a 6.2 percent tax cut on all wages up to $107,000. Employers would have thousands of dollars to spend on new equipment and workers, and employees would have a couple thousand dollars to spend on food and furniture.
So far, the White House has resisted this option for a few reasons: (1) it costs a lot of money; (2) without capping the payroll tax cut, a lot of this money will end up in wealthy people’s pockets and they might not spend it quickly; and (3) it’s unclear how well a one-year tax cut will stimulate growth if people know that taxes will rise significantly two years later. Still, this is a bold and worthy idea — the CBO esimates it could create up to 7 million jobs in 2011 — that would draw both liberal and conservative support.”
http://www.theatlantic.com/business/archive/2010/11/the-best-plan-yet-a-summary-of-the-new-bipartisan-deficit-reduction-scheme/66695/