Yes yes I know what you’re thinking, “not another story about the fiscal cliff”. But you need to trust me on this. I’m not interested in trying to scare you. In fact, the first story should probably make you feel better about the situation. The last one will make you want to throw up. But my hope is that you’ll see past all the garbage stories that have been out there. The fiscal cliff is largely a non-issue. Now here’s some interesting reading that is only related to the topic, but not designed to scare you.
The fiscal cliff is a scam: So says University of Texas economist James Galbraith. He posits that the drama of the fiscal cliff might be the only bipartisan work we’ve seen all year. Both sides seemingly agree to create the crisis. Why would they do that? So they could pass measures to reduce spending and raise revenue. The GOP will pretend to cave on taxes while Democrats offer up concessions in Medicare and Social Security. The picture Galbraith paints is a bit of a conspiracy theory, but you don’t have to stretch the imagination much when you think that both sides created a crisis so they can resolve it without losing face with donors and their party base. Galbraith finishes up by saying they should focus on the real problems like jobs, housing, climate, and infrastructure. Conspiracy or not, I agree.
Gas taxes up for discussion: This is an article that mentions an increased gas tax as a part of fiscal cliff talks. That is uninteresting (gas taxes will be rising at some point no matter what). But the WSJ also offers some insight into how these discussions go down. Imagine you’re a road builder. You know roads are in bad shape but 99% of your business relies on government contracts. You hear all this fiscal cliff talk and you know that’s probably not going to help business. But you call the ARTBA with an idea. Why not lobby now for higher gas taxes? The taxes would be used for road construction. While everyone’s talking about new revenue and deficits, this industry can lobby for more revenue that benefits their bottom line. This is not how we normally think of when lobbying comes up. But it’s definitely going on.
How Washington is manipulating taxpayers and businesses to enrich themselves: This is almost sickening; it is surely infuriating. Bruce Bartlett has made a career out of working for Republicans. He seems to know what goes on in Washington. Here he explains how Congress literally gets in the way of progress just to make their lives a little bit richer. He’s talking about subsidizing research and development, a popular economic theory and common tax incentive that’s never been made permenant:
“For this reason, Republicans and Democrats support making the R.&D. credit permanent. Congress always refuses, because renewal of the credit is a great way to shake down corporate lobbyists for campaign contributions. The lobbyists don’t mind, because when the credit is renewed they can demonstrate that they have added to the company’s after-tax bottom line. In Washington, this is called a win-win – except for the economy, which doesn’t get the R.&D. that it needs.”