With the government putting less money into the economy and
taking more out of people’s wallets, many economists estimate
that these changes could reduce growth by at least one
percentage point and leave at least 1 million more people
jobless. While economists and politicians have been warning
about the dangers of the fiscal cliff, far less has been said
about the more modest, yet serious, toll that these other
government actions would take. Of these, the biggest impact
would come from the expiration of the temporary payroll tax cut,
enacted in December 2010. Since then, the payroll tax that funds
Social Security has been 4.2 percent, down from 6.2 percent,
giving the average family an extra $1,000 to spend. The
disappearance of unemployment benefits would also hamper
economic activity, especially because recipients usually spend
most of the cash on food and other goods rather than saving the
money. Meanwhile, upper-income earners would see a slight
increase in the taxes they pay under President Obama’s healt