Building on the President’s public comments floating an extension of the current payroll tax cuts and extended unemployment benefits, the White House, Congressional Democrats and liberal economists have started talking about adding stimulative measures into any debt limit or budget deal. The poor state of the economy, particularly with respect to unemployment, which stands at 9.1% and which saw another report of elevated first-time jobless claims today, is shifting the discussion over the deficit.

But the shift is fairly subtle. Jackie Calmes’ article doesn’t offer much by way of specifics, outside of re-emphasizing what President Obama said in a press conference earlier in the week, that he would want to extend the payroll tax cut and unemployment benefits.

Democrats and more liberal economists are suggesting that any long-term deficit reduction be paired with short-term spending increases or tax cuts to spur the economy, should it continue to weaken — perhaps by extending for 2012 the payroll tax cuts, business write-offs for equipment and other investments and extended federal unemployment benefits that President Obama and Republican Congressional leaders agreed to in December for this year.

Mr. Obama stoked such speculation on Tuesday at a press conference alongside Chancellor Angela Merkel of Germany, when he was asked what he might do to avert a double-dip recession.

“One of the things that I’m going to be interested in exploring with the members of both parties in Congress is how do we continue some of these policies to make sure we get this recovery up and running in a robust way,” he said.

Republicans would probably support extending the tax cuts, but not the unemployment aid. “I don’t know if throwing more money at the problem is going to solve anything,” Reince Priebus, the Republican Party chairman, said Wednesday at a breakfast hosted by Bloomberg News.

So in asking for one tax-based stimulus that hasn’t shown itself to be very stimulative historically, and one spending-based stimulus that has a high economic multiplier, the Republicans will choose the tax-based stimulus. Shocker!

Meanwhile, the White House has built on the comments from Obama with a counter-offer: an employer-side payroll tax holiday. Currently, the employee side of the payroll tax has been shaved for 2011 from 6.2% to 4.2%, with the theory that employees will spend the money. But this latest proposal would cut the employer contribution to the payroll tax, which funds Social Security and disability insurance. All money would be repaid to the Social Security trust fund through general revenues.

In an analysis released shortly after the December 2010 tax-cut deal, Deutsche Bank Securities economists Joseph LaVorgna, Carl Riccadonna and Brett Ryan estimated that the employee payroll tax cut would boost gross domestic product this year by an additional 0.7 percentage points.

Targeting the employer side of the payroll tax could both attract Republican support and spur job growth, said Christina Romer, who was Obama’s first chairman of the White House’s Council of Economic Advisers.

“A cut in the employer side of the payroll tax could absolutely help accelerate job creation,” Romer, an economist at the University of California at Berkeley, said in an interview. “In addition to the usual beneficial effect on demand, this tax cut would make hiring less expensive.”

We’ve done hiring tax credits, we’ve done “16 small business tax cuts,” we’ve done a number of measures over the past two years aimed at getting businesses to hire, most of which made the cost of hiring cheaper. These have not worked appreciably. The payroll tax cut in question may (or may not) be better than nothing, and their macroeconomic impact would depend on size. The two-point reduction in the employee side of the payroll tax from December 2010 cost roughly $112 billion. It was effectively a two percent raise on the first $100,000 of income. The employer-side would cost the government a similar amount if it were, say, two points, but it’s unclear where that money would go. Would businesses pocket it or use it as an incentive to hire more? Economists think the latter, but given all the other inducements tried I’m skeptical. It’s just as possible that the money will go to keeping people hired, not hiring anyone new. That’s not a bad thing but it won’t necessarily improve the employment situation.

There’s also the danger of continually cannibalizing the payroll tax cut and threatening the Social Security Trust Fund, even if there are assurances that the trust fund would be repaid out of general revenue. Once these reductions start they’re very hard to stop.

What is clear is that this is a matter of political self-preservation for the White House, and they’re thinking of ideas that can a) possibly improve the employment picture and b) pass Congress. But they may have to also think of what CAN’T pass right now as well. AS Mark Weisbrot told the New York Times, “I think Obama himself is going to have to move or he’s going to risk losing the next election. He’s going to have to say clearly that the federal government has to step in when the economy is so weak.”

And one thing is crystal clear: burying the economy with near-term deficit reduction would be fatal for the recovery and lead us back toward recession. Apparently the Administration wants to delay the effect of any deficit reduction deal, which is the right move. But with such big numbers and after talking about this for 18 months, it’s unclear if they’ll be able to get away with that.

UPDATE: Not mentioned at all by the Administration or even liberals who don’t have the burden of thinking about what’s “possible” is the idea that could actually work, i.e. paying people to do stuff.