Watch the Thom Hartmann video, it’s quite informative. Don’t you love how this game is played? The temporary Bush tax cuts, the very same ones that helped ballooned the deficit to record levels, are about to expire and the Capitol Hill Chicken Littles are running around screaming “The sky is falling! The sky is falling!” So letting them expire will throw the country into recession? For those of us outside the Village, how would we even know the difference? We’re already out of work, or working for peanuts.

Now, you realize where this is going: This is the scary story that’s supposed to provide cover for the usual suspects who want to make the Grand Bargain on Social Security. The Greek chorus is gathering, chanting about the “obvious” solutions (hint, hint). “We’ll let you have a little stimulus now, provided we can slash the hell out of your earned benefits later!”

And because this is a complicated idea, most people won’t understand, the librul media can’t explain because they’re too hooked on access to make waves, only a few reporters will bring up the idea of simply raising new revenue, and the hollowing of Social Security and Medicare will soon be a “bipartisan” victory. Don’t you love politics?

Tax hikes and spending cuts set to take effect in January would suck $607 billion out of the economy next year, plunging the nation at least briefly back into recession, the nonpartisan Congressional Budget Office said Tuesday.

Unless lawmakers act, the economy is likely to contract in the first half of 2013 at an annualized rate of 1.3 percent, the CBO said, before returning to 2.3 percent growth later in the year.

Canceling those tax and spending policies would protect the recovery in the short run and encourage more vibrant growth, around 4.4 percent, in 2013, the CBO said. However, unless lawmakers adopt policies that would reduce budget deficits by a comparable amount down the road, the CBO said, the national debt would continue to climb, imperiling future economic growth.

The report, “Economic Effects of Reducing the Fiscal Restraint That Is Scheduled to Occur in 2013,” comes as policymakers are bracing for the most consequential battle over government tax and spending policies in years. The George W. Bush-era tax cuts are set to expire on Dec. 31, along with a payroll tax cut proposed by President Obama. Meanwhile, sharp cuts are scheduled to hit the Pentagon and other federal agencies to meet a deal cut during last summer’s showdown over the nation’s debt limit.

Anxiety is growing over how the impact of those tax and spending cuts would affect the nation’s economic recovery come January, when what’s been nicknamed “taxmageddon” hits. After the November election, a lame-duck Congress will have barely two months to resolve a grinding standoff over taxes and spending — a battle that brought the United States to the brink of default last summer.

4 Responses to Taxmageddon

  1. someofparts May 23, 2012 at 12:55 pm #

    But if Romney tried to touch them people would howl.


  2. Imhotep May 23, 2012 at 1:58 pm #

    Here’s the ironic part….those “Chicken Littles” are correct. Not about the sky falling, but about taking $607 billion out of the economy and causing another recession. There is a simple solution to that problem. 1) Don’t increase taxes on anyone making $100,000 or less. Only increase taxes on the high earners (top 20%). That will flood the Treasury with money. 2) Cut $300 billion from the defense budget and shift that money to road and bridge building. Net neutrality. That should increase employment, reduce unemployment and flood the Treasury with money. 3) Do not cut Social Security or Medicare. There’s no need for that unless you’re a crazy T-bagging ideologue. See how easy it is to “lead” this country?

  3. Pragmatic Realist May 23, 2012 at 3:09 pm #

    The reason the Bush tax cuts had an expiration date in the first place was because the projected deficits from permanent tax cuts were so huge that the bill would not pass the congress if they did not make them expire in ten years. But we know it was all a lie and a trick because they never planned on letting them expire. They claimed that the economy would be so booming by now that nobody would notice the extension.

    As for Social Security (not Medicare or Medicaid which are separate problems) the demands of the baby boom retirements were foreseen in the 1980’s. The retirement age was raised (to 66 for those born after 1950 and 67 for those born after 1960). FICA taxes were raised to allow for the change in proportion of workers to retirees, and the surplus money was saved and invested in top notch high security bonds so that the pension money will be there when needed. The problems they claim are now at a crisis level were already fixed. There is no crisis. Mr Reagan and Mr Greenspan, bless their hearts, took care of it.

    The only problem now is that the issuers of the bonds wants to default and make the bondholders take one of the famous “haircuts”. Just like one of those despicable southern European governments of dark skinned people that issues worthless IOU’s instead of gilt edged AAA government bonds.

  4. Pragmatic Realist May 23, 2012 at 3:15 pm #

    BTW, my solution is to just have the congress adjourn and go home. Let all the tax cuts expire. The increased revenue will put us back under the debt ceiling.

    Just let the worthless, corrupt, self-important do-nothings just go home. Lock the doors and turn off the lights and go home. And shut up. When the army and navy run out of gas, they can come home too. Let us live in peace and quiet.

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