Let's get this clear -- deficits are a long term issue that require long term/structural solutions. A failure to acknowledge and address this foundational truth will lead to a future crash of dynamic proportions - one where $1.5 Trillion of stimulitive efforts and interest rate cuts are no not available (because they've already been done). We've used our 'get out of jail free' card and now we are forced to get serious and take tough measures. "Free Parking" does not exist in real life. Heck, you even pay for the right to park in your own driveway via property taxes, etc.
Allowing the Bush tax cuts to expire at year's end is the appropriate and yet-still-economically safe thing to do. The real question becomes whether to let those tax cuts expire only with regard to those who earn $250,000+ or everyone. And there are valid arguments on both sides. At this present point in time, what is effectively a tax increase should not be born on the middle class. The economic recovery is too tentative and to do so would directly affect consumer spending, small business and the economy. However, a tax cut on the wealthiest Americans would only affect the amount they save or invest (which does have indirect and tangential effects on the economy). Plus, the middle class will be contributing its fair share in the form of a higher retirement age and reduce pensions if true structural reform is achieved as needed. Moreover, tax increases can happen at any time --- I'm not saying permanent tax favortism toward the middle class, just long enough for the country to get more reliably stable. Then in 2012, perhaps a tax increase is in order for all citizens.
Let's take our medicine here. The economy is in tatters. Is it everyone's fault? Yes. Is it everyone's fault to the same degree? No. Does that really matter? No. You live in the country and for better or worse, we're all required to fix the situation now. The immediacy of the crisis has subsided, but do not think that the crisis has been resolved. No, it has been stablized to this point -- where now we can truly discuss, rectify and address the fundamental imbalances that created the problem in the first place.
Its going to be a road of slow growth, tax increases, benefit cuts and reduce government spending -- if we are talking of the straight and narrow path I hope we take. And the reason it will work is because that's exactly the opposite of the road we've taken for the past 20 years (and see where that got all of us). It's the same road that realistic, conservative, financial sound American's use inside the walls of their homes - and nations should not be drastically different.
Data shows that tax increases do not correlate highly with lower economic GDP, especially when the increase is as moderate as the proposed one at the end of 2010. Moreover, data shows that the US pays as much in taxes (compared to GDP) as it did 60 years ago!! Sounds like we haven't had an effective tax hike in quite some time -- I'm sure our spending hasn't been as constrained.
There are measures to address on all fronts, but the first issue at hand are the Bush tax cuts, and for that step, I hope we choose the road of higher taxes (at least on the upper class). Robin Hood for President?
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