Starting today, Congress will begin the process of enacting the deal negotiated between the White House and the Republican Senate. It has been much more difficult than many had imagined to come to a clear cut position on this measure. As I and others have stated over the last several days, the country is on the horns of a dilemma.
If the deal goes through, with the automatic tax increases blocked for two years along with a host of tax “extenders”, social spending and so-called “green” subsidies, the nation is likely to avoid a double-dip recession. But the price is we will be adding nearly $1 trillion in more debt to the U.S. balance sheets because the deal will not address Washington’s out-of-control spending.
If, on the other hand, the deal is rejected, taxes will soar, we will almost certainly get that dreaded double-dip and the budget deficit is likely to explode with added social expenditures.
Neither prospect is appealing. The $120 billion payroll tax reduction is nothing more than Stimulus IV but by another name. Little can be expected from it except adding to the $13.8 trillion debt.
While the outcome is in doubt, the odds favor the establishment. Their fear of another downturn in the economy has greater sway over the politicians than the legitimate fear of opponents — real or feigned — of the growth in the national debt. This is yet another example of the American prejudice for immediate gratification.
Get full story here.
No comments:
Post a Comment