Travesty Tax Bill - Not Much Stimulus, Just More Debt

Think of the tax bill as America’s answer to the Ghost of Christmas Future.  When we were given a glimpse of the future by the spririts we did not like what we saw.  It was a world of pain.  There were tax increases, deduction losses, credit losses, and caps on benefits.  In short, we the people would get less from the government (unemployment benefits, refundable tax credits, etc.) while paying more.  It made members of Congress shiver at the thought!  How could we allow such a thing to happen?  What miserly soul would willfully choose to pay more and get less? Certainly something could be, should be, done!  And here we are.

After years, indeed decades, of spending more than we bring in (with the exception of a brief period in the late 90’s), we have shown ourselves and the world that we have the political fortitude, the character backbone, to do absolutely nothing.  We live to charge more on our national credit card another day!  Just say ”No!” to fiscal responsibility!  Just say “No!” to sane accounting! Just say “No!” to those millions of consituents that recently sent packing all those who were seen as profligate spenders!  Instead of working to pay for, say, ANYTHING, simply pass a bill that keeps the debt snowball rolling.

And don’t do much in the way of helping, either.  Just keep most everything the same.  Keep the tax cuts that have not assisted us in getting out of the economic gloom.  Keep the loopholes and benefits that have done little to spur economic activity.  Continue to assist the jobless in the exact same way that has done very little.  Of course, you can also add a small sweetener – the reduction in Social Security payments, because Social Security is so financially sound that reducing its income by $120 billion won’t matter.  We all know it won’t matter, of course, but not because it is so sound, instead because it is underwater by trillions!  What’s anothe $120 billion? 

The rundown on the bill reads like a roll-call of shame, for the most part, because it is continuation after continuation of programs that have not worked toward our national purposes of greater fiscal responsibility and increased employment -

KEEP – tax rates the same $207.5 billion

KEEP – AMT from hitting middle class, which is adjusted every year – $137 billion

KEEP – Estate exemption up to $5 million, $68 billion

KEEP – Unemployment benefits rolling for an additional 13 months AFTER the 99 weeks that is currently in place, for a total of 155 weeks, $57 billion

KEEP – Cap gains and dividends rates low, $53 billion

KEEP – Marriage penalty relief, $27 billion

KEEP – College payment credit, $18 billion

KEEP – little items of deductions and refundable credits, $6 billion

NEW – 33% reduction of Social Security tax for one year, from 6.2% of payroll for employees to 4.2%, for just 2011, $112 billion

The only new item is the reduction of Social Security payments, the rest, both in spending and tax cuts, are extensions of existing programs which people already get the benefit of today.  So it is as if we have charged almost a trillion on a national credit card, and on the eve of our resolution to begin paying down our balance, we instead lose our nerve and charge just a little more (new Social Security reduction). 

While all the rest of the bill is going to add to our deficit, it is not going to increase what people see in their checkbook, it will simply keep it from going down.  Even the Social Security reduction is less than it appears because it replaces the Make Work Pay program, so it nets most workers about $600 a year, or $12.50 a week. 

In the world of unintended consequences – do you believe employers will be more or less motivated to give raises when they see that their workers have just received a 2% raise across the board? 

I understand that without these measures we would have experienced fiscal pain.  I understand that ending benefits for the unemployed is drastic.  I also understand that the path we are on is one of self-destruction, and we just bought a ticket to get us another two years down the trail.  There are better ways to address what ails us than to simply pretend and extend programs that are costly and ineffective.

Read more at H. S. Dent