On Taxes, Promises and Other Things

So the deal has been struck, but not yet ratified. The Republicans, operating from a position of strength, forced the President’s hand, and in one feel swoop discredited all their propaganda about deficit concern that got them elected (according to their propaganda).

Of course, the true engine behind the Republican taking of the House, was the economy and job loss. The reason for the Republican surge was that many Democrats stayed home, and the conservative base was energized through the use of Tea Party creation and lots of money.

And who put up the money? The rich of course.... And who gets paid back with two more years of a tax cut they don’t need, the rich. The Republicans are able to pay back for the millions they received from the super rich during the election, with a sweet deal that not only gives a huge tax cut but weakens the estate tax.

Both of these developments sharply curtail efforts to redistribute income in the country. Every analysis I have read about the Great Depression, lists an imbalance of the riches toward the rich, as a major reason for the Depression. There is only so much wealth in an economy. If that wealth is concentrated in a few, the many suffer, and a dynamic growing economy is stifled.

This reality is even more credible given the world economy of today. The rich don’t invest in America with their extra money; they invest in China, Brazil, India; etc.

Tax cuts don’t stimulate the economy. They only serve to increase the deficit, unless the government makes equal cuts.

The “trade”, continuing unemployment benefits for over a year, is more government spending at the same time tax cuts are made. This is a double whammy, that drives up deficits.

Of course, this is exactly opposite to the conservative fiscal discipline that dozens of tea party Republicans were elected on.

Get ready for a battle to cut government spending: Social Security and Medicare.

Conservatives must do this, because they were elected with they erroneously claim is a mandate to cut the deficit. Some of the tea party new congressmen, actually believe the B.S. they got elected under.

If the President resists these cuts, they will immediately accuse him of being a big spender. They, of course, will take no responsibility for any of this, as they always do.

However, what else could the President do? If he does not compromise, a huge tax increase begins in January, and could destroy any hope for economic recovery. And, the Republicans seemed intent on not extending unemployment which could have led millions homeless, and take billions out of a struggling economy.

The true test will come if the extension of tax cuts doesn’t stimulate the economy. The history of stimulus is not encouraging. Then, all we get is a growing deficit, no job growth, and a disaster. This is a great danger!

If the tax cuts and modifications don’t grow the economy, the deficit will explode, and we are in for it. We could reduce the deficit by getting out of Iraq and Afghanistan now, which could dramatically help with the deficit. Of course, our conservative friends are right there to stop any withdrawal.

In short, we are in more trouble today than we were yesterday.