Congress is confronting whether to extend the Build America Bonds program. Recently some critics have called the program a state and local bailout and said it has contributed to irresponsible budgeting at the state and local level. It’s time to set the record straight. Yes, state and local governments are under fiscal pressure. No, borrowing for municipal needs isn’t the reason. And no, Build America Bonds are not a “bailout” and they didn’t cause the fiscal pressure. In fact they helped relieve it.
Economy & Budget
No one seems to know the full schedule for the Democrats’ lame-duck Congress, but we know the Democratic Majority has not scheduled a vote to prevent all tax rates from rising. If there is no vote on the tax cut extensions for all Americans before the end of the year, taxpayers at every income level will see their paychecks reduced as significant tax increases go into effect.
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.
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.