Rank and file Democrats in the House (and perhaps the Senate) are getting nervous about the upcoming increase in taxes coming with the expiration of the so-called Bush tax cuts.
Rightly they should, and for reasons that go beyond their future political careers.
In the midst of this recession, as has been described by economists, ad nauseum, the expiration of the tax cuts would be devastating.
Folks dont read the Gormogons to hear reiteration of the obvious. They want Gormotastic analysis.
I suspect that President Obama will be disappointed, as the election nears, that the Bush Tax Cut expiration will be kicked down the road, rather partially and punitively allowed to increase via his piecemeal approach. Clearly, from the link above, he is trying hard to sell the piece meal part. Can we all vote for the part we agree on before I dont let you vote for the part I dont agree with you on? I won, ya know.
President Obama will be in a position to either veto or sign the tax cut extension.
Now this is where it is tricky…
If the tax cuts get extended, the folks (aka taxpayers) will be happy that they arent getting rooked.
That being said, a temporary extension (say to the end of 2012 after the next election) will not truly help the economy.
Now, Czar, you are thinking, But, Dr. J, youre a notorious supply sider…how can you say that wont be enough? You know that theres no way in Hell that with the Ds in power, further cuts would be made! And Czar you are right!
The economy, because of the expiration of the Bush tax cuts, and folks not knowing whats going to happen, is like the Red Queen from Through the Looking Glass.
Its running as fast as it can to stay in place.
Dr. J has friends in the venture capital, investment and money businesses. From what theyve told me, their money has been sitting largely on the sidelines, because they dont know what the future holds. Money hates uncertainty.
Therefore, if there is a short term extension of the tax cuts, I dont see things getting much better as a consequence, although I also dont think theyd get much worse. Those dollars sitting on the sidelines wont put their helmets on and get into the game, because theyll have to get out as quick as they got in.
If the tax cuts were extended for a decade, or two, or even better, made permanent, (and with the addition of cutting spending) recovery would come sufficiently quickly that President Obama can book DC golf courses for 2012-2016.
Long term extension would loosen the coffers holding the money sitting on the sidelines, and there would be stimulus injected that hasnt been seen since the 80s.
Now that certainly wont happen, because as the Volgi previously posted, President Obama is probably a true believer in his anti-colonial world view, and would have to go against it to swallow what he considers a bitter pill.
Actually, scripsitDr. J, not the Czar of Muscovy at all.
Божію Поспѣшествующею Милостію Мы, Дима Грозный Императоръ и Самодержецъ Всероссiйскiй, цѣсарь Московскiй. The Czar was born in the steppes of Russia in 1267, and was cheated out of total control of all Russia upon the death of Boris Mikhailovich, who replaced Alexander Yaroslav Nevsky in 1263. However, in 1283, our Czar was passed over due to a clerical error and the rule of all Russia went to his second cousin Daniil (Даниил Александрович), whom Czar still resents. As a half-hearted apology, the Czar was awarded control over Muscovy, inconveniently located 5,000 miles away just outside Chicago. He now spends his time seething about this and writing about other stuff that bothers him.