By the time this column reaches cyberspace the “The Event Whose Name Shall Not Be Spoken” will have occurred. I suspect that, just like the Mayan calendar prediction of the world’s end on December 21st, the planet will continue to revolve in pretty much the way it has for the last four billion years.
The economic apocalypse so widely predicted may have had its beginning, although I suspect that the media hype and the hysteria of the financial markets will be the most prominent parts. I would not begin to suggest that I understand all the economic machinations of the global economy, but there have been more than a few who are quite knowledgeable in such matters who suggest that it may not be as terrible as has been predicted.
If it happened, then the Bush era tax cuts (among other things) which were a political ploy, will expire sending tax rates back to the Clinton era when the economy was doing quite well, thank you very much. The budget was balanced for the first time since 1969, we were not fighting wars that we declared, there was much more concern about Whitewater and Miss Monica’s dress than anything else; the world continued to circle the sun unperturbed.
To oversimplify the tax cuts which we all welcomed in 2000 gave the appearance of having more money in our pockets. The financial industry jumped all over that convincing us that there was no limit to our financial largesse. I experienced that first hand when I built a new house in 2001. Seeking a mortgage, no financial officer to whom I spoke even looked at my financial statement. The only question they asked was, “How much would you like to borrow?” Curious as to their total lack of concern about my financial well-being, I asked. The answer was, reading between the lines, “We don’t care about that. We’re going to sell the mortgage; we will get a fee for that, but then we’re done. Not my problem.” We all know how well that worked out; not too badly for me, but for those who were sucked into the trap of the subprime market it was a disaster.
I mention that to point out that after the recession there are millions who have not recovered. The unemployment rate is still almost 8% and benefits for those unfortunate folk will have ended if Congress doesn’t do something. The increase in income tax will work a hardship on millions who, in 1998, were able to handle their taxes without difficulty. Such is not the case today.
To increase the tax rate for those making more than $250,000 a year will do little to decrease the debt; the amount of revenue generated would pay only a fraction of the interest on our debt. It would be a symbolic gesture at best. But there is a bright side: It has given Rush Limbaugh apoplexy. He is loudly fulminating that all Obama is interested in is creating a socialist state. I would remind him of Winston Churchill’s prescient remark, “The great vice of capitalism is the unequal sharing of wealth; the great virtue of socialism is the equal sharing of misery.” I suspect the truth lies somewhere in between, not that the facts would interest Mr. Limbaugh.
When things go awry, the first reaction is to fix blame. In this case, there are many candidates. The whole idea was a pig in a poke; we have known from the start the piper would have to be paid. At the ten-year mark, Congress didn’t want to face it, so they treated us to a two year extension. Now, wonder of wonders, they still can’t get together until they can blame the other side. Poor John Boehner! I suspect he would have worked something out with the President, but he has no control over a sizeable number of his house members.
The whole thing is like a toothache: Sooner or later you have to go to the dentist. Well, that time has come. Let’s hope the extraction which Congress must perform will at least have adequate anesthesia. Rest assured Congress will look after themselves. That seems to be the only thing in which they excel.
Hayden Hollingsworth
