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Politics, Politicians, and Current Events Examined

Simply Predictable

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By Korso

So we got some more news on the economy today, and it doesn’t look terribly good. In fact, it looks terribly terrible–and coming on the heels of that sobering housing report earlier in the week, it appears as if the Recovery Summer has been anything but.

Again, though, I can’t fathom why the wizards of smart in D.C. would be shocked, shocked by this turn of events. The outcomes were entirely predictable, at least for those of us who live out here in the real world, where people respond to incentives instead of wishful thinking. Inconvenient Truth #1: What happens at the beginning of next year? That’s right–the Bush tax cuts expire! Inconvenient Truth #2: How do businesses respond to this looming threat? By front-loading their activities before 2010 comes to a close! In other words, the modest growth we experienced earlier in the year was largely artificial, spurred on by impending tax increases. Now that businesses are beginning to wrap up those efforts, growth is starting to contract. I expect we’ll see even more of that trend as 2010 winds down.

So what’s a government to do? In a world where Congress and the White House actually gave a hoot about how business works, they’d extend the tax cuts–or better yet, make them permanent. Alas, that is not the world in which we live. Perhaps in the face of heavy losses in the fall, the Democrat leadership might change their mind about this, but I have my doubts. It would be tantamount to admitting that tax cuts spur economic growth, and they can’t afford to have that meme floating around out there. Meanwhile, the rest of us can’t afford to pony up for their vision of America.

November can’t get here soon enough.

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Written by Korso

August 27, 2010 at 9:41 am

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