A Modest Proposal
A modest -- but serious! -- proposal, that might actually appeal across partisan lines:
- We suspend the Social Security payroll tax for three years;
- We issue inflation-adjusted 10-year bonds (TIPS) in the amount of the foregone revenue (estimated by the Social Security Trustees as about $2.2 trillion from 2011 - 2013). The real interest rate on ten-year TIPS is currently about 0.9%. (The economy's real growth rate is anticipated to be about three times that, so the burden -- tax as a share of output -- of paying the $2.2 trillion plus interest ten years from now will be smaller than the burden of paying it today, even if the initiative does nothing to spark an economic recovery.)
- Profit!