Monday, June 11, 2012

News from the future: Democrats cave on Bush tax cuts

Expect a quick resolution of the looming "Taxmageddon" issue, where the Bush tax cuts (and a bunch of others) expire on 31 December and suddenly taxes go up by hundreds of billions a year.  And by "quick resolution", I mean "the Democrats cave".  Consider just what it is that they're looking at:
... the Federal Reserve expects the economy to grow at a roughly 2.9 percent pace in 2013. If Congress does nothing at the end of this year, much of that growth could be wiped out, and there’s a strong possibility that the United States could lurch back into recession.
That's the Washington Post, bastion of the Liberal agenda.  But even that article underplays just how dire the Democrat's position is.  Every business in the country is looking at what will happen to their taxes next year, and planning accordingly.  What they're doing is clamping down on spending and hiring, cutting costs to build up a "rainy day fund" just in case.  What this is doing is suppressing investment and hiring - just what the Fed projects, only happening right now.

And the Democrats know this.  Bill Clinton sees this reality, even if Obama doesn't:
What I think we need to do is find some way to avoid the fiscal cliff, to avoid doing anything that would contract the economy now, and then deal with what’s necessary in the long term debt-reduction plans as soon as they can, which presumably would be after the election.
All the Republicans have to do during the "negotiations" is delay.  Every day where this is not resolved is another day that the economy simply cannot improve, and this will hurt the Democrats much more than the Republicans.  And so it will play out like this:

1. 2-3 weeks of hysterical teh ebil Rethuglicans are wrecking teh economy!!!eleventy!!

2.  The Republicans express grave concern over the impact of the Democrat's proposed "tax the rich" schemes to the economy, particularly to small business incorporated under title S.

3. The Democrats panic and agree to extend everything as it is today.  In other words, they cave.

Even if Obama doesn't agree, the Democrats in Congress are so spooked that they'll go against him on this.  It's possible that the Stupid Party is, well, stupid enough to let the Democrats bluff to a win on a busted flush.  But I don't think so this time.


Old NFO said...

I dunno... I'm to the point I believe they are willing to bring down the country rather than compromise...

Anonymous said...

Gordon Brown in the UK called the Tory bluff and did a scorched Earth policy knowing full well he couldn't win. The Dems will do the same to make the next fours years crappy for the Romney Presidency, so their guy/ga;/tranny can get in.

Jake (formerly Riposte3) said...

There's a key phrase in that Clinton quote there: "after the election."

Translation: "Give the mob their bread and circuses in the lead up to the election, then crack down once it's over and we've got less to lose. Two years from this election the voters won't care - it'll be old news."