Sunday, December 05, 2010

Oh yeah, that will solve the problem

Our elected representatives seem to have this all figured out. Instead of cutting spending and raising taxes to close the budget deficit and avoid bankruptcy, they are going to keep the Bush tax cuts and extend unemployment benefits, in other words, cut taxes and raise spending. Yeah, that'll work.

I don't like to predict doom and gloom. A lot of people have lost a lot of money short-selling the United States. But if there's a trajectory that is going to avoid national bankruptcy at this point, I don't see it. If raising taxes even on the very wealthiest is politically untenable then what's going to give instead? Defense? Social security? Medicaid? Good luck with those. Everything else (except interest on the debt of course) is lost in the noise. Grow our way out of this? How? I keep hearing pundits pinning their hopes on somehow "getting the banks to ease credit so the American consumer can start buying again." That makes no sense to me at all. We're not going to "grow" our way out of this mess by increasing the rate at which we buy Chinese televisions, or the rate at which we allow Wall Street bankers to rip off homebuyers and investors, or the rate at which we invest in copycat internet startups at inflated valuations.

Maybe we can make money selling predator drones to the rest of the world, but I'm not sure that's such a good idea in the long run.

Gotta love this quote:

"Sen. John Kerry (D-Mass.) said President Obama was 'not caving'' by considering an extension of the tax cuts for all income levels."

If that's "not caving" I really have to wonder what caving would look like.

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