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Federal Hall, 26 Wall Street, New York: It was on this site that the US Congresss first met and where George Washington took the oath of office as the first president. Source: Wikimedia Commons
Dr. Peter Morici says Washington is turning to the Bush tax cuts
scheduled to lapse in January.
The Bush tax cuts were a huge success, and failing to extend those for all
Americans—not just families earning less than $250,000--would be a terrible
mistake. Contrary to the propaganda coming out of the White House and the
Treasury, George Bush achieved a lot of growth the first seven years of his
presidency by deregulating the economy and cutting taxes.
China and the banks abused the wide open U.S. market - - the former by undervaluing
its currency and otherwise juicing its trade surplus with the United States, and
the latter by making foolish loans and disguising the risk in complex
mortgage-backed securities to create big executive bonuses. The trade deficit
deflated demand for what Americans make and credit crunch made business
expansion impossible - - voila the Great Recession!
Be clear. The Bush tax cuts had little to do with the collapse and in fact gave
us many good years of solid growth.
The economic recovery is slowing. Housing starts and consumer spending are
flagging, and economists have marked down growth forecasts to less than 3
percent—that’s not even enough to bring down the unemployment rate.
Growth will get some help this summer and fall from the replacement cycles on
technology equipment—computers and internet backbone—and commercial trucks and
other business equipment. Many businesses have stretched vehicles and other
equipment to the point that the next maintenance cycles are simply to
expensive - - replacement now is the best business decision.
Those forces will have played out and energy prices will be rising again by
winter - - that’s when President Obama’s higher taxes would take effect.
Increasing taxes in January would kill what is a weak recovery.
For the President, soaking the rich may be a good political tactic to deflect
public displeasure with congressional Democrats but it is terrible economy
policy.
Debating whether taxing the rich would hurt the
economy, with James Pethokoukis, Reuters BreakingViews and Mike Papantonio,
Liberal Radio Host:
