GOP on the defensive on fiscal policy

by charvaka Fri Aug 12, 2011 11:54 pm

The Tea Party's extreme agenda is finally getting some pushback from the center-right. Those who find the Tea Party's nonsensical positions appealing would do well to read this.

http://www.gainesville.com/article/20110812/ZNYT01/108123021/1109/sports?p=2&tc=pg

Among those calling for a mix of cuts and revenue are onetime
standard-bearers of Republican economic philosophy like Martin
Feldstein, an adviser to President Ronald Reagan, and Henry M. Paulson
Jr., Treasury secretary to President George W. Bush, underscoring the
deepening divide between party establishment figures and the Tea
Party-inspired Republicans in Congress and running for the White House.

“I think the U.S. has every chance of having a good year next year, but
the politicians are doing their damnedest to prevent it from happening —
the Republicans are — and the Democrats to my eternal bafflement have
not stood their ground,” Ian C. Shepherdson, chief United States
economist for High Frequency Economics, a research firm, said in an
interview.

“I think Republicans should recognize [eliminating tax breaks and loopholes] is a way of raising revenue
without hurting incentives by higher marginal tax rates,” Mr. Feldstein
said.

S.& P. based its downgrade and its negative outlook for America’s
credit rating partly on the assumption that Bush-era tax cuts for high
incomes would be extended past their 2012 expiration, “because the
majority of Republicans in Congress continue to resist any measure that
would raise revenues.” S.& P. said it could change its outlook to
stable if the tax cuts ended.

The prospect of further
reductions worries forecasters. Jerry Webman, chief economist of
OppenheimerFunds, wrote in an analysis that while the cuts were not huge
this year or next, “they are nonetheless contrary to what would be
expected in a fragile economic environment.”

In
separate interviews, Joel Prakken, chairman of Macroeconomic Advisers, a
forecasting firm, and Laurence H. Meyer, its co-founder and a former
Federal Reserve governor, called the reductions “job-killing spending
cuts” — playing on Republicans’ mantra against “job-killing tax
increases.”

Mr. Prakken said tighter spending would “slow economic growth unless it
was offset with lower interest rates through the Fed.” But with interest
rates already near zero, the best the Fed could do this week was signal
that rates would remain ultralow well into 2013.

“At the very least,” said Mark Zandi, chief economist of Moody’s
Analytics, Congress should renew for another year two measures that
expire after 2011 — payroll tax relief for employees and extended
unemployment compensation — as Mr. Obama has proposed. If either
expired, Mr. Zandi said, that could shave roughly a half-percentage
point from economic growth next year.

In a column in The Washington
Post on Friday, Bill Gross, who runs the giant bond-trading firm Pimco,
lashed out at Republicans and “co-opted Democrats” for setting aside
widely accepted economic theory.

“An
anti-Keynesian, budget-balancing immediacy imparts a constrictive noose
around whatever demand remains alive and kicking,” he wrote.
“Washington hassles over debt ceilings instead of job creation in the
mistaken belief that a balanced budget will produce a balanced economy.
It will not.”

by Marathadi-Saamiyaar Fri Aug 12, 2011 11:57 pm

None of these count.

Until the Nobel laureate Sarah "the pathetic" Palin gives her expert views.

GOP on the defensive on fiscal policy

GOP on the defensive on fiscal policy

Re: GOP on the defensive on fiscal policy