Tim Iacono writes that the tax cut deal made in Washington is basically another $900 billion stimulus that doesn't address the major underlying problems in the economy. Meanwhile the US deficit will continue to climb. See the following post from The Mess That Greenspan Made.
It’s hard to look at what Congress and the White House apparently agreed to yesterday as anything other than more stimulus, what some would term “throwing good money after bad” as none of the economy’s underlying problems appear to be the target of the $900 billion in government spending and, no, by underlying problems I’m not referring to the lack of aggregate demand, income inequality, or any of the other zany reasons offered up to mask over the problems caused by a multi-decade credit orgy, the natural decline of a super power and the lower standard of living that accompanies these developments.
Of course, all the money that is about to gush from Washington will just get tacked on to the annual deficits for the next two years and the national debt. Here’s a breakdown of the costs from various sources around the internet:
* $400 billion – Extending the 2001-2003 tax cuts
* $150 billion – Business investment write offs for next year
* $140 billion – Changes to the AMT for middle class tax payers
* $120 billion – Cutting the payroll tax from 6.2 percent to 4.2 percent
* $56 billion – Extending unemployment insurance benefits for 13 months
* $17 billion – Extending the tax cuts from last year’s stimulus bill
* $17 billion – Lowering the estate tax to 35 percent for some
Those last two were just guesses, but they’re relatively small and make the total come out to the widely publicized $900 billion total. I wonder what the deficit commission thinks of this.
This article has been republished from Tim Iacono's blog, The Mess That Greenspan Made.