By Dan Kervick
I suppose it is has become too much to expect that the White House and US Congress might actually succeed in doing something useful for the economy at some point in the near future. But perhaps they could at least settle on the wisdom of Hippocrates and agree to do no harm. Why not agree on a statement like the following:
Given the recent decline in the federal deficit – a natural result of US economic recovery – both parties agree the best economic policy for our country right now is to adopt a “wait and see” strategy. Rather then putting pressure on fragile private sector balance sheets by peremptorily reducing spending or raising taxes, we have concluded that it is best to allow the recovery to continue to take hold by standing pat with our current level of fiscal accommodation. Mindful of the hopeful economic signs and the self-stabilizing reduction in the deficit, we have agreed to repeal the Budget Control Act of 2011 and extend the payroll tax holiday at this time, and to stand ready to reevaluate the situation as economic developments merit.
Then come back in January and pass further middle class tax relief. Obama gives up on his grand bargain dreams; Republicans give up the goal of attacking entitlement programs. Both sides eat a little crow after putting the country through two years of wholly unnecessary debt hysteria.
In your dreams.
They don’t believe their compromise will be harmful. Perhaps a little painful in the short run, but helpful in the long run.
The good news is that there will be no immediate spending cuts, just tax increases for the first 8 years of the 10-year deal. None of these agreements, from Reagan on, have ever actually implemented any spending cuts. Just lesser increases, if anything, and usually not even that.
It probably won’t change your opinion, but I accidentally hit the “post” button on this post before it was done. I just edited it to clean it up slightly.
Keep what we’ve got, and pass further middle class tax relief. Sounds like the Romney proposal. Not many Progressives wanted that policy at election time. Be careful what you vote for.
No. I’m saying let the Bush tax cuts expire, and then offset only the cuts on the middle class.
Ah, I see. Then get credit for a tax cut while actually raising taxes.
How do you “offset only the cuts on the middle class”? If you lower the 15% bracket to 10%, and the 28% bracket to 25%, doesn’t that give the taxpayer in the 39% bracket a bigger tax cut than those in the lower brackets get? Or are you proposing two sets of brackets, like 10-25-35 for the middle class, and 15-28-39 for “the rich”?
The Bush tax cuts end automatically. Just reinstate the cuts for people under 250 K.
But that’s a tax cut for the rich!! And the richer they are, the more their taxes go down !!
Not gonna happen. I don’t exactly know what will happen but do nothing? Nah. These fools will make a deal to do something. Neither of them are really into the people. But maybe I will be disappointed?
Professor Kelton and the rest of the NEP team are all awesome. Thank you for your intelligent economic discussions! It is so sad how few people know what the &*^% is going in the world of Econ.
You really just have to stand back in awe of the ineptitude of Washington right now, up and down the line.. I mean it is just incredible how little these people are capable of doing. I’m not sure if this speaks more to the division of ideology among the populace or the business atmosphere or what. Although, oddly enough, this colossal goat f*ck of a negotiation seems like it will probably end up at about where we started – little to no spending cuts, little to no tax increases, punt it away to next year. And on and on we will go like this, until *something* gives way. Keep fighting the good fight Dan!
Yeah, both parties are full of idiots. But in this case, doing little would probably be best.
–reevaluate the situation as economic developments merit–
Very rightly advised – there should be developed a path of compromise instead of needless competition.
Guillotines and gallows, not tweaking the current unfathomably corrupt system is the only real solution left for the 99%. Capitalism and our captured government cannot coexist with public purpose and democracy. State sponsored capitalisms goal is destruction of democracy and the planet. The complete destruction of the capitalist system is the only viable alternative.