Obama refuses to extend Bush tax cuts for the rich, Orszag disagrees.
One of Peter Orszag's first messages after leaving the public sector was to advise his former boss to extend the Bush cuts for two more years. Ideally he would prefer to extend the cuts only for the middle class, but despite his liberal desires has come to a sober realization.
Why does this combination make sense? The answer is that over the medium term, the tax cuts are simply not affordable. Yet no one wants to make an already stagnating jobs market worse over the next year or two, which is exactly what would happen if the cuts expire as planned.
Talk about a rock and a hard place. So despite his Keynesian ways, Orszag admits that a tax increase (essentially what the expiration would amount to) would damage jobs. His populist desires compel him to suggest we keep these cuts for the middle class only, yet he realizes the wealthy keep this economy moving. This is essentially a microcosm of the age-old debate between conservative and liberal thinking, brain versus heart. Unfortunately, there is not enough brain as Peter is missing two very important components.
First of all, he wants to keep the cuts only as long as is needed for the economy. This is Statist, what about not taking from hard working people what the government does not deserve? Who can argue that our federal government is spending beyond their means? Even the most tree hugging liberal can admit to this obvious fact.
Second of all, Orszag is framing the entire issue in the context of missing revenue, that is why he argues we cannot indefinitely keep the cuts. Well you know, outside of Statist land where politicians run amok with other people's money there is another concept. Most private sector individuals know this concept very well, but for politicians it is a difficult concept to swallow. STOP SPENDING. Look, Orszag already admitted that the cuts are directly related to job growth. So the government must do whatever it can to promote this behavior and in this particular case, it must calculate the projected lack of revenue and end that amount in spending. This way you have people keeping their money, stimulating the economy and we have less waste as departments, agencies and bureaucracies shut down. Easier said than done, you say, never going to happen, you say. Sure, you can sing that song all day long, but this is the kind of mentality that got us into a 13 trillion dollar hole. Nothing is as permanent as death and taxes, this is because governments never shrink.
So of course, our wonderfully astute president always trying to clamor to his dwindling populist base throws logic to the wind and declares that the wealthy are NOT will not be getting an extension. Presumably he is threatening to veto. Instead, Stimulus II is on the way, who cares that 800 billion failed to make a dent?
In a speech in Cleveland on Wednesday, Mr. Obama will also make a case for the package of roughly $180 billion in expanded business tax cuts and infrastructure spending disclosed by the White House in bits and pieces over the past few days. He would offset the cost by closing other tax breaks for multinational corporations, oil and gas companies and others.
Yeah. Keynesianism is alive and well in the Obama White house. Politicians still believe they can simulate artificial demand, jump start the economy and neutralize the expenditure. It is a wonder that the preference still lies in complex shuffling of funds, closing loop holes, tweaking the baroque tax code and determining where and how to spend.
Yet like Peter Orszag indirectly admits, tax cuts work, so why not go beyond Bush and lower taxes by 5% across the board and reduce spending by a similar amount. Even though credit will continue to contract and deflation will still be at our door this combination will prove to be the best long term investment by a long shot.
Why does this combination make sense? The answer is that over the medium term, the tax cuts are simply not affordable. Yet no one wants to make an already stagnating jobs market worse over the next year or two, which is exactly what would happen if the cuts expire as planned.
Talk about a rock and a hard place. So despite his Keynesian ways, Orszag admits that a tax increase (essentially what the expiration would amount to) would damage jobs. His populist desires compel him to suggest we keep these cuts for the middle class only, yet he realizes the wealthy keep this economy moving. This is essentially a microcosm of the age-old debate between conservative and liberal thinking, brain versus heart. Unfortunately, there is not enough brain as Peter is missing two very important components.
First of all, he wants to keep the cuts only as long as is needed for the economy. This is Statist, what about not taking from hard working people what the government does not deserve? Who can argue that our federal government is spending beyond their means? Even the most tree hugging liberal can admit to this obvious fact.
Second of all, Orszag is framing the entire issue in the context of missing revenue, that is why he argues we cannot indefinitely keep the cuts. Well you know, outside of Statist land where politicians run amok with other people's money there is another concept. Most private sector individuals know this concept very well, but for politicians it is a difficult concept to swallow. STOP SPENDING. Look, Orszag already admitted that the cuts are directly related to job growth. So the government must do whatever it can to promote this behavior and in this particular case, it must calculate the projected lack of revenue and end that amount in spending. This way you have people keeping their money, stimulating the economy and we have less waste as departments, agencies and bureaucracies shut down. Easier said than done, you say, never going to happen, you say. Sure, you can sing that song all day long, but this is the kind of mentality that got us into a 13 trillion dollar hole. Nothing is as permanent as death and taxes, this is because governments never shrink.
So of course, our wonderfully astute president always trying to clamor to his dwindling populist base throws logic to the wind and declares that the wealthy are NOT will not be getting an extension. Presumably he is threatening to veto. Instead, Stimulus II is on the way, who cares that 800 billion failed to make a dent?
In a speech in Cleveland on Wednesday, Mr. Obama will also make a case for the package of roughly $180 billion in expanded business tax cuts and infrastructure spending disclosed by the White House in bits and pieces over the past few days. He would offset the cost by closing other tax breaks for multinational corporations, oil and gas companies and others.
Yeah. Keynesianism is alive and well in the Obama White house. Politicians still believe they can simulate artificial demand, jump start the economy and neutralize the expenditure. It is a wonder that the preference still lies in complex shuffling of funds, closing loop holes, tweaking the baroque tax code and determining where and how to spend.
Yet like Peter Orszag indirectly admits, tax cuts work, so why not go beyond Bush and lower taxes by 5% across the board and reduce spending by a similar amount. Even though credit will continue to contract and deflation will still be at our door this combination will prove to be the best long term investment by a long shot.
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