Posted by Lambchop
According to Andrew Taylor, reporting for the Associated Press, the Congressional Budget Office (CBO) has released a report with some unsettling news. Apparently allowing the Bush tax cuts to expire and allowing the latest automatic spending cuts to take effect would have an adverse consequence on the economy – and would most likely lead to a recession. Ya think?
Oddly, this report flies in the face of the Keynesian religious zealots who pretend that increasing “revenue” (tax increases) and increased government spending will stimulate the economy. So far, only Obama, a few Democrat congressmen, talking heads on CNN and MSNBC and Paul Krugman buy into this. The CBO seems to think otherwise.
The Congressional Budget Office report says that the economy would shrink by 1.3 percent in the first half of next year if the government is allowed to fall off this so-called "fiscal cliff" on Jan. 1 — and that the higher tax rates and more than $100 billion in automatic cuts to the Pentagon and domestic agencies are kept in place. There’s common agreement that lawmakers will act either late this year or early next year to head off the dramatic shift in the government's financial situation. But if they were left in place, CBO says it would wring hundreds of billions of dollars from the budget deficit that would "represent an additional drag on the weak economic expansion." - AP
"Such a contraction in output in the first half of 2013 would probably be judged to be a recession," CBO said.
Harry Reid, The Whispering Idiot and Senate Majority Leader, has vowed to refuse to act on the expiring tax cuts and spending measures unless the Republicans demonstrate flexibility on raising taxes. "If Republicans want to walk away from the bipartisan spending cuts agreed to last August, they will have to work with Democrats to replace them with a balanced deficit reduction package that asks millionaires to pay their fair share," said a statement prepared by Reid’s office.
I guess he can’t figure out that the CBO's report is indicating that perhaps RAISING taxes MIGHT be a bad idea. Chris Van Hollen (D-MD) the ranking top Democrat on the Budget Committee is, however, showing signs 0f intelligent life, "CBO observes that simply extending all of our current tax and spending policies will produce unsustainable deficits and debt, which will also send the economy into decline. We need to act and we must do so in a balanced way."