Saturday, December 11, 2010

"Tax Cut Deal Spurs Deficit Anxieties"

"...Senator Tom Coburn, an Oklahoma Republican who recently voted for a plan to slash the national debt by $3.9 trillion, told The Financial Times yesterday that the tax cut deal sends a bad signal to capital markets: the U.S. isn't serious about combating its ballooning deficit. Coburn is troubled not by the cost of the proposed economic package but by the fact that the proposal doesn't include offsetting spending cuts.

...The U.S. May Soon Become A Real Credit Risk, concludes 24/7 Wall St.'s Douglas McIntyre, pointing out that the rates for America's sovereign debt have risen recently. Tax benefits that fail to spur spending will raise the deficit, he contends, and the gamble that the tax cut deal's cost can "be recouped through spending is a long one if unemployment remains high, consumers remain concerned, and businesses refuse to increase their investment activity because of a fear that the economic recovery is a mirage." The Federal Reserve's low interest rates haven't served as a boon to spending, McIntyre says, so why will low taxes?

Fiscal Deficits Have Economic Consequences, warns Simon Johnson, former chief economist at the International Monetary Fund, in The New York Times: "We cannot afford to blithely increase our national debt..."

Uri Friedman

1 comment:

Brenda Bowers said...

Agree! Am so upset with Boehner. He has made this really bad deal for the tax payers and he has appointed the old guard or I should say the "old dogs!" as committee chairmen. The Republicans are going to find themselves out in 2012 and perhaps a third party. I think even the Democrats would vote for a third party candidate who appeared to want to get the country back on its feet and STOP SPENDING, BB