Now that the “Super Committee,” or perhaps I should say “Stupor Committee,” has failed to come up with any sort of compromise regarding deficit reduction, we can continue merrily down the path to insolvency. All congressional (and presidential) eyes are focused on next November. Apparently both Republicans and Democrats have similar strategies. First, join together to create an economic crisis, and then play the blame game. Just once wouldn’t it be refreshing to see our politicians join together to accomplish something good, and then they could fight over who should get the credit.
The Republicans on the Super Committee would not agree to a tax increase under any circumstances. And evidently they have all signed a pledge to never increase taxes, and those pledges are held by a lobbyist named Norvor Norquist, who heads up the Americans for Tax Reform. If that pledge is broken, the attack ads will be launched. The pledge signers include all but one of the Republican presidential candidates, Jon Huntsman.
I am not an economist, nor am I in favor of higher taxes to fund big government spending, but I am in favor of everyone paying their debts. Too much debt will always economically destroy an individual, a family, a company or a country.
Think about taxes this way for a moment, and decide which you would rather have? A tax increase of 2% a year accompanied by an annual return on your savings of 10%; or no new taxes and an annual return on your saving of less than 2%. Hmmmm?
Since the Bush tax cuts were put in place 10 years ago, we have experienced the worst 10 years of performance from the stock market since the Great Depression, less than a 2% annualized return. And with the failure of the Super Committee to accomplish anything we had a “Black Monday” yesterday which is not going to encourage shoppers on “Black Friday.”
I know it’s not that simple, and there are many factors contributing to the huge deficit we face. But that is the precisely the point. This rigid, unflinching opposition to any sort of tax increase does nothing to solve the problem, and we won’t have to wait until next November to see the result. The Market will tell us long before then.