The failure of the House Republican Leadership tonight to rally its troops to pass “Plan B” is being celebrated by Dems as a major defeat for the Republicans. They, the Dems, might want to hold back on popping the champagne corks. Neither side has much to celebrate but now, with the Republican proposal dead, the ball rolls back into the court of the Senate Democrats and the President. What are they going to do? Nothing? And, chalk this up as a victory for the Tea Party. Tea party types will happily accept higher taxes in exchange for drastic spending cuts.
This means we are likely to go over the so-called fiscal cliff come 1 January. Good by me. Time for America to wake the fuck up and stop deluding itself that it can spend wantonly while reducing the number of taxpayers who pay taxes. I am sick of the bullshit. Damn Obama for his disingenous lie that the “rich aren’t paying their fair share.” When the top 5% pay more than 60% of the taxes, one thing is clear–the rich are paying an unfair share. Fair is for everyone to pay something. Unfair is asking only one group to shoulder the burden.
I am sick of the Republican insistence on protecting a bloated defense establishment and approving entitlements without committing to the revenues to sustain them. The blast of new taxes that will hit everyone come 1 January will ensure the economy tanks. While Republicans may initially get the blame for that, Obama and the Dems will have to deal with the Republicans on coming up with legislation to try to revive us from a major recession. In that debate, which will probably take place over the summer, the Republicans could press for a reform of the tax code and probably will happily let Government spending decline because of de facto circumstances.
From a macro economic standpoint this is bad news. When you raise taxes and cut public spending in such a drastic manner the most likely outcome is economic recession, if not depression. We will find out within eight weeks whether or not John Maynard Keynes was right or wrong. What do you think?