I was hoping that we would go over the fiscal cliff because taxes would go up on everyone. I think everyone should suffer the pain of paying for the government’s uncontrollable spending. Perhaps the “middle class”, whom politicians believe are clueless, would then start to think about the future of our country. Perhaps they would take exception to the cost of what their government is doing to them.
The proposed deal includes a token tax increase on the $400/450K income level which, with other taxes, will raise $60 billion a year. They currently spend $1.1 trillion more than they take in every year so new revenues of $60 billion is a symbolic tip of the hat to the Democrat’s liberal base.
They didn’t have the moral fortitude to tackle the spending issue, so they pushed it off for a few weeks or months. As I warned you before, the spending cuts and entitlement reforms will never happen. It appears that automatic (sequestered) across the board cuts are the only way to tackle this problem.
The media have been horrible in reporting this issue over the last few months. Always you hear that Congress can’t get together and do something for good of the country. The issue is defined almost solely in terms of revenue raising (new taxes) rather than the real issue, spending. The refrain is that there are some recalcitrant Republicans, specifically the “Tea Partiers”, who are responsible for our misery and malaise. If only they could see the broader picture and compromise and get things done (i.e., raise taxes on the rich).
We have compromised ourselves into a $16.4 trillion national debt. This debt is equal to 106% of GDP. When do you change things?
Another way to look at the “Tea Partiers” is that they are heroes who have stuck to an important principle in order to stave off ultimate bankruptcy. They actually do understand the real issue and are willing use their leverage to force spending cuts. Thank you, Ladies and Gentlemen.
I have yet to hear from any economist presented on the media who has gotten this issue right. Typical was an interview I heard tonight on BBC with an NYU economist who could have been channeling Paul Krugman: spending cuts are needed but not right now; the government needs to continue to spend to revive the economy, taxes need to be raised on the rich but not on the middle class because the middle class will spend all their money which is good for the economy; everyone (the Republicans) needs to compromise. That passes for economic wisdom in America.
It will be a long New Year Eve in Congress tonight. Who knows? Perhaps it will be defeated in the House. Whatever. Sleep well.
Happy New Year, dear reader.