If you'd like to republish any of my articles, you are welcome to do so. Please add a link to the original post on my blog.

Tuesday, 1 January 2013

Obama's Fiscal Cliff Is Permanent

America will be on a fiscal cliff no matter what agreements are reached between Democrats and Republicans.

The damage done by the Obama administration to the economy is too deep to be saved by last-minute deals.

Tax increases on the rich have virtually no impact on the reduction of the US national deficit, and are imposed for ideological, not practical, reasons.

The type of measures that could be most effective, reducing public spending, are exactly what Obama does not want to do. He did not pursue that policy in his first term and is unlikely to do it now, after being re-elected.

The Democrats, as they have done many times before (, make promises that they will not maintain, in order to deceive Republicans and lead them to make concessions.

Harvard professor and chairman of the Economics Department at Harvard University Greg Mankiw explains why this policy of tax increases on the rich will not solve the debt problem and will only lead to more, never-ending tax hikes:

He also explains why taxing 'the rich', which is already done anyway since one third of their income is taken in tax - despite the media's generous coverage of unenlightening anecdotes about unrepresentative cases of tax avoidance -, cannot mathematically solve the problem of the government's overspending on entitlements. So the choice can only be between drastically reducing the welfare system expenditure or increasing taxes on the middle class (Mankiw obiously does not consider the possibility of robbing the rich of all or most of their money, although Obama and his comrades might):

The current policy is lunacy and Obama has dragged American economy into a vicious, self-perpetuating circle of ever-increasing poverty and on a road to communism not through revolution but by stealth, piecemeal, a bit of redistributive tax hike at a time.

No comments:

Post a Comment