Tuesday, December 07, 2010

My Spiel on "The Deal"

When I last turn the radio off, Rush was delaying declaring his opinion on "The deal" that would extend the current tax rates and extend unemployment benefits another year. I wanted to get my .02 of a Federal Reserve Note in on it.

The deal is business as usual. The pattern is nothing new. Republicans have always wanted to cut taxes and Democrats have always wanted to increase social spending. That is exactly what has gotten us into trouble. Quick, what's the underlying problem in our economy? If you said "too much debt" you still don't get the prize because even a child can see that by now. Everyone can, except the two-gang cabal in DC. They want to continue to spend and not pay for it. This deal is just the latest example of that.

Debt loads on all levels are crushing this economy and eliminating growth potential. Much of the debt is bad debt that should be liquidated, but the government insists on propping the bad debt up because the politically-connected entities which own the debt don't want to pay for their mistakes. They prefer the losses be socialized, even if they continue to privatize the profits.

If this deal used existing stimulus money to extend the benefits, it would be a good vote. Much of the stimulus money is just political pay-off to special interests anyway. But it doesn't do that. While holding tax rates at their current level (and an increase in taxes with the economy this fragile would be madness), spending will go up again. That means debt will go up again. And debt is the real problem- one which neither party seems willing to seriously address.

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