Congress must act to avoid recession
If Congress fails to act before the start of next year, the economy will again fall into recession and growth for all of 2013 will be limited to only 1.9 percent. That’s the latest prediction from the Congressional Budget Office. Its outlook is substantially gloomier than at the beginning of the year.
The galling thing about this is we need not have gotten to this point had Congress come to a reasonable agreement on solving a “fiscal cliff” that’s been staring every lawmaker in the face for months.
But thanks to the continuing stalemate, on Jan. 1 the economy will be whacked by nearly $500 billion in tax increases and spending cuts. That’s a lot to yank out of an already-weak economy, one that’s “weaker than previously predicted,” as the CBO put it.
The group says the fiscal cliff would push the jobless rate up from the current 8.3 percent to more than 9, with unemployment virtually locked in above 8 percent through 2014.
Neither party, however, seems willing to step out of its now-accustomed role. Each accuses the other of being stubborn and unreasonable. That’s unacceptable because the increasing risk that Congress can’t come up with a reasonable solution in time is already economic drag. Consumers are watching their wallets more closely. Businesses are reluctant to hire for fear of adding to the payroll just before a slump in demand.
Under the circumstances, the election couldn’t come soon enough. The nation needs an outcome that delivers enough clarity to finally begin clearing away the clouds of uncertainty hanging over economic growth.
Congress, and the White House, need to deal with this threat well before the deadline.
Mark Robertson
8 months, 4 weeks agoObvioulsy, the Star is setting the stage for its upcoming embarrassing endorsement of President Obama for reelection. Yes, some blame was given to the White House, but the overall tone of he column is that it is the fault of Congress(The House) that the economy is still in disastrous shape. Obama had the House and a filibuster proof Senate when he came into office. He was able to ram through the 800 billion “stimulus.” It predictably turned out to be a disaster, as government spending efforts have always been. It actually greatly hurt the economy.
It is so obvious what needs to be done for the economy. Do what has always worked. Not only do the Bush tax cuts need to be made permanent, taxes need to be further cut across the board, including and especially on the “rich.” Every time there has been across the board tax rate reduction, Treasury revenues have greatly surged, and the rich, as a whole have paid much more in taxes, because of the always corresponding economic growth. After the Reagan tax rate reductions, cutting the top rate from 70 to eventually 28 percent, 20 million jobs were created in the 80s. Treasury revenues nearly doubled and the top one percent of earners went from paying 17 percent of the federal income taxes to about 25 percent.(Tax Foundation) The top 1 percent now pays around 40 percent. After the Bush tax cuts of 01 and 03, Record Treasury revenues came in from 2005 to 07. And tax payments by millionaire households more than doubled to 273 billion in 2007 from 132 billion after tax rates were cut in 2003.(WSJ, 12-1-10, The Dead Enders, p A-18) There also needs to be a major overhaul of regulation. It is stifling business, especially small business. And the U.S. corporate tax rate, now the highest in the world, needs to be greatly reduced or eliminated. There also needs to be an entitlement overhaul, including much cutting of the programs. We have a 100 trillion plus unfunded liability for Social Security and Medicare. And a major reason that business aren’t hiring is the atrosity known as Obamacare. Our country would not survive Obamacare, at least as we know our country. Romney and Ryan have to be elected along with a Republican House and Senate so that Obamacare can be relegated to the ash heap of history, where it so belongs. And, in addition to entitlement reform, there needs to be a massive cutting of spending. The bureaucracy has to be massively cut. As mentioned, what needs to be done for the economy is not complicated. The problem is that these solutions get in the way of the Democrats efforts to have power and control over us. Obama has been an economic disaster, some say by design.(See the movie 2016, it’s devastating.) Getting rid of him in November would be a major step to restoring the economy. Yes, the election can’t come soon enough. If Romney and Ryan win, hiring would start the next day. Thank you. Mark Robertson Independence