The employee hiring tax holiday provision seems unlikely to make much difference to me, the cost per employee seems so much higher than the part of this in taxes that I just don't see it making a big difference. Public spending and preventing more firing in the public sector seem like more effective means (though linking this to something like foregone or reduced COLA in the next contract seems like a good trade off here, job security vs. salary seems fair and it would put off reductions in employee spending to the future as well as give better long run budget numbers). Anyway, this might be the best possible given current politics, but that doesn't make it impressive.
[Update: Read a bit more about the plan this morning. There's more direct stimulus than I thought, which makes it slightly better. I remain very sceptical about temporary stimulus through tax cuts, while permanent tax cuts work as stimulus what I've read about temporary cuts is very mixed. If cuts are targeted towards income constrained individuals they work, but people who do not suffer these constraints tend to act closer to a lifetime income model and there will be little change in their spending. The payroll tax cut is better than some, but any stimulus that gives the most to the people least likely to use it seems badly targeted. Why simply maxing the first $12,000 of income or so non-taxable isn't ever mentioned or considered is beyond me (with the current standard deduction of $5,800 this would effectively give everyone with an income over $12,000 $795 and it seems like an easy sell, saying we'll make your first X amount of income non-taxable sounds straightforward to me, a payroll tax deduction however would only give $400 to someone making $20,000 and $2,000 to someone making $100,000, admittedly, going the income exclusion amount would mean making this a refundable tax credit instead [wrote too fast here, though a tax credit of the size of the rebate would work, our tax system makes any simple changes difficult because there will be odd interactions with other taxes and exemptions, I'm sure that someone that knows more about the tax code than I do could make this work without too much trouble], since EITC and other tax credits/deductions leave many poor people having no income tax after adjustments (or a tax exclusion could be imposed on the payroll tax instead of a rate deduction), but it can still be sold in such a straightforward manner that popular support would probably be with it, it is just insane to be giving $2000 to someone who is unlikely to spend it when the person who will spend it only gets $400).
Looking at the NY Times columnists, Krugman seems happy about it, but it sounds like a story of low expectations to me. Brooks makes a rather curious comment about Reinhart and Rogoff:
The general lesson I take from this history is that policy makers stuck in a financial recession should probably think about the long term. You’re going to be stuck with a lousy economy anyway. Anything you do to try to boost the growth numbers next month or next quarter is going to be overwhelmed by the underlying forces
Which baffles me because Reinhart and Rogoff say:
Policy makers must recognize that banking crises tend to be protracted affairs. Some crisis episodes were stretched out even longer by the authorities by a lengthy period of denial... Our extensive coverage of banking crises, however, says little about the much debated issue of the efficacy of stimulus packages as a way of shortening the duration of the crisis and cushioning the downside of the economy as a banking crisis unfolds.
Brooks is seeing what he wants to see here, I certainly didn't end up with that takeaway from Reinhart and Rogoff. An important thing to note with crises is that prior to the Great Depression there was a substantial subsistence economy propping up demand even during the crisis. Even during the Great Depression "about half the poor during the Depression years grew some of their food, 30 years later about 85% of poor people lived off the farm. For them, nothing was free." (Patterson 42) There was also a large pool of tenants and sharecroppers, particularly in the South, that were largely outside the broader society and that lived at subsistence level. The point being, Reinhart and Rogoff's data set has very few post WWII banking crises, it is very hard to draw conclusions from the data set regarding the modern economy when we don't have a parallel small farm economy creating an island of demand in the midst of depression operating by its own rules. By the Great Depression this had become to small to do much, and is even smaller now, in previous crises however, the farm economy was larger than the rest of the economy. Regarding stimulus, all Reinhart and Rogoff can really say is we don't know.]