The payroll tax applies only to the first $110,000 of income, so it hits an ordinary worker almost as hard as it hits a billionaire. It is our most regressive tax.
Obama's payroll tax cut gives the average worker an extra $1000 per year. These days, most workers spend nearly all the money they earn, so the money supplied by the payroll tax cut goes right into our sluggish economy. The payroll tax cut stimulates our economy more efficiently than most other tax cuts.
The US Treasury reimburses the Social Security trust fund for the money lost to the payroll tax cut.