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Friday, December 17, 2010
Social Security taking in less than it is spending? No problem - cut the payroll tax, run up the debt. After all, China and Russia et al. are still (as of this writing at least)willing to lend to us. Now we can go back to wondering and debating why interest rates are rising.
For Treasury Secretary Geithner et al. here's some news: the economy doesn't respond to temporary measures. Those whose spending we need are scared and will save the 2% break on the payroll tax. For those who aren't scared, it won't make a hill of beans in their overall spending. Stop scratching your heads and wondering why the "cash for clunkers" program was a bust and why the temporary tax breaks didn't resuscitate the real estate market. Businesses understand better than our legislators the folly of hiring on the basis of temporary measures.
We can come up with reasons to support our agendas no matter what the circumstance. We can cut taxes because we have massive "surpluses as far as the eye can see" and we need to give people back "their money" or we can cut taxes because the "Great Recession" is the worst economic downturn since the 1930s. It doesn't matter, either way - Goldman's bonuses are intact.
Let our children worry about the sinkhole. As yields rise and the interest on the national debt climbs, the slice of the pie going to other countries will grow.
Food for thought: next year, this bill's social security tax cut will expire. Will we be able to let it expire? After all, it will be a tax increase at that point; and with high unemployment, who wants to raise taxes?
Much, much better to borrow. And please do me a favor - save the pontifical speech making when we hit up against the debt ceiling.