Wednesday, January 2, 2013

When Will This Game of Kick The Can End??

A couple of quick thoughts after the latest political can-kicking exercise...
  1. Once again, it's our children and grandchildren who get screwed.  Not a single entitlement reform or reduction in spending, in fact, the bill will add $3.6 trillion to the budget deficit.  After all, its much more important that the average family can buy a couple of iPads in 2013 than it is for our children to have a stable economy and low taxes in the future.  Remember, despite what you might hear from Krugman and others, borrowing money to fund large deficits today is not free.  Sure, the debt service is currently cheap, but only until it's not.  If a $20+ trillion debt needs to get refinanced after it changes from cheap to not cheap, we're in deep trouble.  We would rather atone for our sins by paying more today in the hopes that our children and grandchildren inherit a country with a strong fiscal foundation, low taxes, a robust economy.          
  2. We're very happy to see the payroll tax cuts expire, and an attempt, albeit feeble, at reforming the tax code by reducing deductions and credits.  We've discussed these points ad nauseam on these pages, so won't get into it again. 
  3. Democrats had the leverage, the Republicans knew it and fought as long as they could, but ultimately had to compromise.  Hopefully this ends the mantra that Republicans are the party of "no" and we can get on with negotiating in good faith.  What exactly did the Democrats compromise on?  The definition of rich being $400k instead of $250k?  Yes, but that's it.  The Republicans compromised on pretty much every single principle they hold by passing a bill with no entitlement reforms, no spending cuts, higher taxes and increased spending on welfare, energy subsidies, etc.  
  4. After 4 years and yet another legislative "victory" it would be laughable for President Obama to continue to blame others for our current and future economies.  President Obama now owns this economy, for better or worse.  Maybe the economy continues to improve as a result (or most likely, despite of) this administrations policies - an improvement that the President will undoubted take credit for (see #4 below).  But what if we continue to struggle through low growth and high unemployment?  Will it still be President Bush's fault?  Will voters buy that excuse in 2014 and 2016? 
  5. Throughout this process, the President's behavior has been repulsive.  He should have saved the taxpayers millions of dollars, and the environment tonnes of CO2 emissions, by staying on vacation in Hawaii.  Permanently.  What exactly did he accomplish for the American people during the last week?  Biden accomplished in a weekend what Obama (and Harry Reid) couldn't in four years, yet the President goes on national TV ripping into his political foes and acting more like Stalin than the President of the United States - "I will not have another debate with this Congress about whether or not they should pay the bills they have already racked up."  Incredible negotiating skills.  His insistance that this deal still doesn't make everyone pay their "fair share" is like my son at dinnertime when he hasn't had a nap.  He spends the entire meal begging for dessert but won't eat his vegetables, and when we finally give in and dessert arrives, he's not satisfied and wants more.  Unsurprisingly, he continues to showcase his repulsively self-centered approach to everything.  Patting his own back for each "achievement" - "I will sign a bill that...", and placing the blame elsewhere when it's a problem - "they should pay the bills they have already racked up."  As for his leadership skills, Robert Samuelson at the Washington Post does a better job than we could in highlighting the President's vacuous leadership. 
  6. Every piece of legislation should be permanent.  We have plenty of evidence to prove that temporary measures don't work and are a complete and total waste of precious taxpayer dollars and legislative time.  Write a law, and it's permanent.  If the next Congress doesn't like that law, change it with new legislation if you have the votes, but it remains the law of the land in the meantime.  How much political capital and angst has been wasted on temporary legislative band-aids to extend this tax break or that welfare program (which were only temporary to make the budget numbers look acceptable)?
Overall, this deal isn't terrible, but it's still just a tiny band aid over our nations huge fiscal fracture.  We can't wait to give our thoughts on the various other band aids sure to pop up in 2013 (sequestration, debt limit, etc.)


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