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If not now, when?
Howard Richman, 11/29/2012

If they can't agree to bring the budget toward a sustainable balance when the next elections are 2 years away, when will they do it?

President Obama is calling for an increase in taxes on the rich to replace the broadbased tax increases combined with budget cuts known as the fiscal cliff. Instead of reducing the current $1,327 billion annual budget deficit by about $500 billion per year, Obama's plan could reduce it by as little as $80 billion per year.  Specifically, according to The Guardian:

Obama, emboldened by his election victory, proposed a bill to stop 98% of taxpayers facing automatic rises in January but imposing increases on the remaining 2% of the highest earners. Deep cuts in spending would be left until next year. "My hope is to get this done before Christmas," he said.

Meanwhile, according to Reuters,  indications are that the Republican leadership will accept this disaster:

Republican unity against raising tax rates for the wealthy began to show cracks on Wednesday after a conservative congressman said he would back an agreement with President Barack Obama to raise rates on the rich but extend tax cuts for income below $250,000.

With Congress scrambling to avert a series of tax increases and spending cuts due to kick in at the end of the year - known as the "fiscal cliff" - Congressman Tom Cole said Republicans should approve a deal ensuring 98 percent of Americans do not suffer a tax increase that endangers the economic recovery.

Here's how the future that they are agreeing to was described by the Congressional Budget Office:

If the fiscal tightening was removed and the policies that are currently in effect were kept in place indefinitely, a continued surge in federal debt during the rest of this decade and beyond would raise the risk of a fiscal crisis (in which the government would lose the ability to borrow money at affordable interest rates) and would eventually reduce the nation's output and income below what would occur if the fiscal tightening was allowed to take place as currently set by law.

And here is how my father, son and I described this future in our American Thinker article about the fiscal cliff (The Fiscal Cliff is a Good Thing):

The actual scenario is even worse than the CBO makes out. If the U.S. national debt continues to explode, then, eventually, when the Federal Reserve raises interest rates to prevent inflation, the rising interest rates will greatly increase the interest component of the federal budget.

From then on, either alternative would be a disaster: (1) the federal government could default, or (2) the Federal Reserve could take the brakes off inflation. In either case, the dollar would collapse in the currency exchange markets, interest rates and import prices would go sky-high, and the U.S. standard of living would hit the bottom with a splat.

They are sacrificing America's economic future in order to avoid a minor recession. Isn't there an adult left in Washington?

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  • [An] extensive argument for balanced trade, and a program to achieve balanced trade is presented in Trading Away Our Future, by Raymond Richman, Howard Richman and Jesse Richman. “A minimum standard for ensuring that trade does benefit all is that trade should be relatively in balance.” [Balanced Trade entry]

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