The Democrats didn’t get it, nor did the GOP. Even the White House hasn’t got the memo that taxpayers don’t want, and don’t need, another team of bureaucratic and political tax gurus to ponder how to break the logjam on the looming and backbreaking Bush tax hikes.
Economy & Budget
Much post-election newsprint and internet chatter has been devoted to the debate over whether to extend the Bush-era tax cuts and, if so, in what form and for what length of time. This is understandable considering the degree of lethargy still plaguing our economy. Saving taxes also is a good topic to be discussed at any time -- whether in the form of marginal rate reductions, extending tax credits, or via other mechanisms -- insofar as saving money for taxpayers is never a bad thing. And, with regard to tax savings for businesses, more often than not tax cuts increase government revenues in the long run.
What compromise should the administration offer on the Bush tax cuts?
“What we are experiencing is not a recession, neither great nor small, but rather a global transference of wealth, power and prestige on an unprecedented level, carried out, in von Clausewitz’s words ‘by other means’.”
Where do we go from here?
We’ve already established that this is not a typical business cycle and this recession falls out of scope of previous recessions. Even the Great Depression was typical in the sense that it set off a worldwide fall in demand and productivity. It is now widely understood that while government intervention did stop the catastrophic collapse of the global economy, this intervention did little to revitalize global economic growth which did not resume until the onset of World War II.
Congressional leaders of both parties will meet with the president at the White House today to talk about the work we have to do before the end of the year and, hopefully, about the things we can do together to foster the right conditions for businesses to start investing again and creating jobs.
We are being told by our government that they can prevent the next great depression. In fact, they would say they already have with the recovery from the greatest downturn since the Great Depression in the early 1930s. So, why has this recovery been the weakest from a strong downturn in decades? Why has unemployment remained near 10% despite the greatest stimulus program in history with the longer term unemployed rising to unprecedented rates? Why have home prices rebounded only marginally despite the lowest mortgage rates in history? Why have more mortgages continued to fall into negative equity with endlessly rising defaults and foreclosures? Why are businesses not borrowing or investing despite growing cash balances? Why do most consumers not see a growing economy again until sometime in 2012? And why are they suddenly voting Republican in 2010 after suddenly voting Democratic in 2008?
The American Dream has long meant the opportunity to buy a home, save for retirement, go to college, start a business and build an economic future for oneself and one’s family. Small wonder that the federal government plans to spend $4 trillion during the coming decade to try to help us invest in our future. But, as noted by the co-chairs of the National Commission on Fiscal Responsibility and Reform, we’re pursuing this shared dream in ways that have become wasteful, regressive and ineffective. We recommend rebalancing our budget. We could cut the national debt by $500 billion or more over a decade, provide more effective subsidies for middle- and low-income families, boost private saving and reduce the demands on our welfare system. We could be on our way to a true “save and invest” economy.
In 2007, Federal Reserve Chairman Ben Bernanke spent most of the year reassuring markets that the U.S. sub-prime mortgage loan problem would be contained. In an all too similar a manner, ECB President Jean-Claude Trichet now keeps asserting that Europe’s sovereign debt crisis does not pose a significant threat to the overall European economy let alone to the global economy. U.S. policymakers would do well to disregard Mr. Trichet’s sanguine remarks and brace themselves instead for a European economic tsunami that is all too likely to seriously derail the fragile U.S. economic recovery.
Real men, real human beings, with feelings and families, fought and died at Gettysburg to preserve the Union, to ensure, as their president, Abraham Lincoln, would say later, that “government of the people, by the people, for the people, shall not perish from the earth.”