December 7, 2010
So we have a deal. President Obama and Congressional Republicans have agreed to maintain the existing federal income tax structure while continuing to pay the unemployed to stay home. If they had done nothing, income tax rates would have risen sharply in January - just the thing to crimp investment that creates jobs and can pull us out of recession, (though it would have brought in more cash to federal coffers). And if they had done nothing, unemployment benefits would have expired for some people (though in many cases people who have been receiving those payments for nearly two years) but at least that would reduce federal spending.
Instead, the President and Congress have done something. But of all the something's they could have done, this one will result in less revenue and more expenditure. Any household knows that less income and more expense is a recipe for insolvency. In true Washington style, the deal is like Santa Claus: gifts for everyone. Reduction in Social Security taxes (never mind looming problems there), estate tax adjustments, capital equipment write-offs. Everyone seems to have forgotten the Simpson-Bowles Fiscal Commission Report from just last month. It's 50 pages but here's the short version: we spend too much and take in too little.
If this is bipartisanship, give me less.
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