On tax deal, Wall Street Journal follows FAB

Wall Street Journal now follows FAB!

Concerning the agreement to extend the current tax rates for 2 years, FAB wrote:

The only good thing about the 2-year extension is that it just postpones the real debate for another 2 years down the road, just in time for the next election cycle.

The Wall Street Journal now agrees:

But if an angry, let-me-be-clear Barack Obama just looked into the cameras and said he’s coming to get you in two years, what rational economic choice would you make? Spend the profit or gains 2011 might produce on new workers, or bury any new income in the backyard until the 2012 presidential clouds clear?

No matter how much economic bump Mr. Obama gets in 2011 from extending the Bush-era tax rates, the 2012 election will be fought over a deep national anxiety that he rightly identifies but misinterprets.


In such a high-stakes world, Barack Obama’s obsession with having it out over the tax tables is a vulnerability. His opponent in 2012 should run straight at it.

If the economy improves, Republicans will say we shouldn’t mess with a formula that’s working, which is a message that will resonate with Independents.  However, Obama will be able to convince many voters that he deserves credit for the improvement, anemic though it might be.   He’ll be trying to get voters to maintain one status quo (himself as President) and change another (tax rates), all at the same time.

If the economy does not improve, Obama will be in a world of hurt.

Of course, as I said, maintaining the current tax rates will not improve the economy, but it will at least avoid another insult.  Other factors might help.  (For example, dramatically cutting deficit spending will do a world of good by improving confidence in government.)  Whatever happens, it will be great political theatre.  The danger for Republicans will be if they try to oversell the effects that maintenance of current tax rates will have.

I’m still looking for something else good in this deal.  They apparently gave us all a one-year reduction on Social Security taxes.  Not so good.  It’s just another give-away program that will do little to stimulate the economy, any more than Porkulus I did.  Plus, more deficit spending just depresses even more our confidence in government even more, which is a huge drag on the economy.

Further, raiding the SS fund will put a few more dollars back into the pockets of working people, but it will be (supposedly) stealing it from their own Social Security fund.  I say supposedly, because in reality, there is no SS fund.  Our SS taxes have become a gigantic slush fund that is used by politicians to hide the true amount of deficit spending.  They “borrow” (a.k.a. steal) our SS money (what they can’t borrow from the Chinese) and never pay it back.  If you account for this borrowing/stealing, the deficit is much, much higher than they say it is.  Harry Reid admitted to the thievery when he told HuffPost, “The money doesn’t come out of Social Security. It comes out of the general fund.”

More deficit, less confidence in government, worse economy.  It will improve, but not as much as it could.

They supposedly extended unemployment benefits, but I don’t believe it lets people collect beyond the current 2-year limit.  It just extends the program that allows people to collect up to 2-years, as compared to the normal limit of 26 weeks or so.  As I understand it.

Here’s the one good thing about this process.  If this bill goes down, we can hope the Republicans in the Senate will block every other piece of lame-duck legislation, as they have promised to do.

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