Saturday, December 17, 2011

Who Do You Blame?

The absurdity is in place.  Late Friday, Congress and the White House agreed on a two month extension of the payroll tax break.  Surely, never in the history of the Republic (or likely any other nation state, republic or not) has discrete tax policy been rendered into law with a two month expiration date attached to it.  It is qualitatively different, in profound ways even more perverse, than last minute, temporary overall budget extensions employed during times of threatened government shutdown.  If the government can decide to collect a particular tax or not for as little as two months, why not two weeks, two days, or two hours?  Why not have individual time limits on every other prescribed tax, tax rate, or fee within a given budgetary period?  The mind reels.  It's like chaos dressed in a suit.  And not that I want to keep you up nights, but it is well to remember that the yahoos who call this governance are in charge of the most powerful nation on the planet.

Also, notwithstanding inaccurate news reporting, talking head blather, and misleading statements from the likes of Senator McConnell and Speaker Boehner, the impediment to a longer term agreement had not so much to do with the disputed oil pipeline from Canada, as it did with arguing over how to pay for the revenue lost to the Treasury because of this middle class tax beak.  The issue was resolved with a decision to increase lender guarantee fees charged on every Freddie Mac and Fannie Mae backed mortgage, enough to cover the two month extension.  So, from now on the average home buyer will have to pay more for mortgages, as the lenders pass on the fee increases.  Hence, the middle class payroll tax relief will be in some part immediately offset by fees mostly paid by the middle class.  Such giving with one hand and taking with the other just dilutes the stimulative effect.

You may wonder who is most responsible for such exercises in Quixotic policy adventures.  The Republicans are only too happy to lie about how tax breaks "pay for themselves" when it comes to giving billions away to billionaires who never do anything productive with it, but completely abandon that position when it comes to giving relief to the broad majority of wage earners.  It is the later tax break, in fact, which will be spent in the economy immediately, thereby increasing demand, vitality, hiring, and income.  That pick-up in overall economic activity can later be tapped to replace the revenues which are foregone to make it happen.  That is the way to construct a sensible macroeconomic strategy for rejuvenating a stalled economy, and repairing an imbalanced budget.  But the Republicans propose nothing of the sort, therefore those lying hypocrites can take a lot of credit for this joke of a policy.

But it is well to remember that today's Democratic party is nothing like the Democratic party of decades gone by.  No, these Democrats are economically pretty damn stupid.  They can't even spell macroeconomics.  As a result, zerObama and the rest of these clueless dolts have completely bought into the notion that every stimulus expenditure must be offset by some form of revenue increase or outlay reduction.  Unless increased revenues were to be had through rescinding the egregiously wasteful Bush billionaire tax give aways, the insistence that any stimulus simultaneously  begin to suffer the effects of erosion is ridiculously stupid and self-defeating.

So, we find ourselves the subjects of misrule by a combination of lying Republicans and stupid Democrats.  Seems only fair to blame the stupid liars.

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