Sometimes it’s helpful to take a step back from all the political theater we see each week and think about exactly what is going on in Washington. What was the real point of the Super Committee? They were supposed to find some low-hanging fruit that could result in compromises and save a trillion or so bucks from the deficit. Expectations were… something.
The hope was that a combination of “revenues” and spending cuts would help the committee get there. If they didn’t then a number of pre-defined cuts would hit in a couple of years. Well we all know the committee failed, but was it ever supposed to succeed? I don’t think so.
By agreeing on “punitive” cuts ahead of time, no one really takes responsibility if those cuts ever actually hit the books. It was a punishment for gridlock. No one wins, no one loses. And cuts still happen with no one person taking responsibility.
And so what happens if Congress fails to accomplish anything else? When most of the tax cuts and breaks we enjoy were put into place, they were temporary measures. They have expiration dates. So in order for us to continue to enjoy them, they must be extended. And if they aren’t?
Some estimates say the deficit could be cut by $7 trillion over the next decade. That’s significantly higher than any proposal by anyone in Congress.
Why then, is anyone rushing to do anything? For one thing Republicans don’t want to let a bunch of tax cuts expire. Democrats don’t want certain ones to expire. Both parties agree that the American people need some tax cuts to stimulate the economy.
Congress hopes to find a way to preserve those tax breaks while cutting some of the fat out of the budget. In essence, everyone is trying to make their mark. If they don’t try to represent those that got them elected (notice that’s different than “those that voted for them”) then they aren’t going to get re-elected.
Admittedly, one could also say they are working towards a more efficient government. That would be welcomed by all, but the good news is that if they fail to accomplish anything, many of the fiscal issues may still go away.
Read: Congressional Gridlock Could Be Good (Marketplace.org)
Image: rpongsaj
 By The Weakonomist |
The Weakonomist is the founder of Weakonomics. Clicking the picture of the puppy will tell you more about him. If you like what you're reading consider subscribing to the blog, following him on Twitter, and checking out the related posts below. Please consider a donation if you really enjoy Weakonomics. Also keep in mind that nothing I say can be construed as financial advice. |
