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Payroll tax cut, benefit extension a type of stimulus

Leaders in Washington have agreed to a deal to extend the payroll tax cuts to the end of the year, which will put a little more money into our pockets -- and hopefully, the American economy.

Jeremy Hobson: Congressional negotiators have reached a tentative deal that would extend the payroll tax cut through the end of the year. It would also extend unemployment benefits and maintain the pay of doctors who accept Medicare. All of that means more money will go into more people's pockets -- and perhaps, they'll go out and spend it. I think there's a word for that.

Here's Marketplace's Heidi Moore.


Heidi Moore: Here's what you need to know about the Congressional deal:

Tony Fratto: It's a stimulus bill.

Tony Fratto is a managing director at Hamilton Place Strategies. He says that as the economy stays sluggish, we're in an era of seemingly endless government stimulus.

Fratto: We're going to have additional stimulus to the end of 2012 at least, and the recession ended in the summer of 2009. That's a very, very long time.

But not all stimulus is created equal. Fratto thinks this one may be better than the huge stimulus bill passed in 2009 because today's spending avoids the red tape of the last bill.

Stan Collender is a partner at Qorvis Communications. He sees a major flaw in the agreement from Congress.

Stan Collender: If you increase spending on one thing but cut spending on something else, then the net bottom line to the economy is the same thing: it's net zero. You're not really stimulating very much.

But many experts agree that it's at least worth a try.

In New York, I'm Heidi Moore for Marketplace.

About the author

Heidi N. Moore is The Guardian's U.S. finance and economics editor. She was formerly the New York bureau chief and Wall Street correspondent for Marketplace.
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