One of the biggest concerns at the Federal Reserve and within the Obama administration is the spike in long-term unemployment, which is at its highest levels in the post-second world war period.  And there is a vigorous debate over what tools policymakers can and should use to fight it.

Today, the Treasury department issued a potentially encouraging report on the HIRE act, a new law passed in March which gives a payroll tax exemption to companies hiring workers who have been unemployed for more than two months.

 Alan Krueger, chief economist at the Treasury, said that his research, based on the labor department’s current population survey, found that from February through May about 4.5m hires were eligible for the tax break, which is undoubtedly an impressive figure. But is there a catch? Read more