Winehole23
03-02-2012, 02:22 PM
The long drawn out Republican race has significantly reduced Republican chances of retaking the White House. And with each of the remaining candidates supported by so-called super PACs (http://www.thefiscaltimes.com/Articles/2012/02/02/Super-PACs-Bring-New-Era-of-Daddy-Warbucks.aspx#page1) with billionaire backers, fears are growing that the party won’t even know who its nominee will be until the convention. It appears almost certain that whoever finally gets it will be severely weakened and unacceptable to significant numbers of Republicans.
Meanwhile, record low approval ratings for Congress are weighing on incumbents of both parties. However, Democrats believe that the burden of disapproval is falling more on the Republicans. Consequently, Democrats now think they will hold the Senate and have a good shot at retaking the House.
Of course, these perceptions could change before November. In the meantime, both parties are trying to figure out how to play budget and tax issues for maximum political benefit. Unfortunately, to the extent that both parties think they will have better cards to play after the election, it reduces the chances that any kind of deal can be reached beforehand. This means that they will just fester all year, adding to uncertainty and risking economic chaos.
With the economy picking up, the Treasury may get enough extra tax revenue this year to put the debt limit problem off until after the election. I suspect that the expiring tax cuts will simply be extended for another year or two after the election unless Obama loses. In that case, he may veto any extension. Senate Democrats may also filibuster any Republican effort to extend them in 2013, leaving the economy to cope with a large tax increase at a time when it may still be fragile.
Clearly, the optimum solution would be a deal this year to replace the automatic budget cuts now in law with a better mix of spending reductions, as well as some kind of tax reform package to replace the expiring tax provisions and get the tax system on a permanent track. But given time constraints and political gridlock, it is hard to see that happening.
One thing is sure. Both sides will use the threat of fiscal apocalypse to energize their voters. How that plays out may determine the ultimate resolution of the nation’s looming fiscal crisis.
http://www.thefiscaltimes.com/Columns/2012/03/02/The-Two-Issues-that-Can-Bring-Down-the-Economy.aspx#page1
Meanwhile, record low approval ratings for Congress are weighing on incumbents of both parties. However, Democrats believe that the burden of disapproval is falling more on the Republicans. Consequently, Democrats now think they will hold the Senate and have a good shot at retaking the House.
Of course, these perceptions could change before November. In the meantime, both parties are trying to figure out how to play budget and tax issues for maximum political benefit. Unfortunately, to the extent that both parties think they will have better cards to play after the election, it reduces the chances that any kind of deal can be reached beforehand. This means that they will just fester all year, adding to uncertainty and risking economic chaos.
With the economy picking up, the Treasury may get enough extra tax revenue this year to put the debt limit problem off until after the election. I suspect that the expiring tax cuts will simply be extended for another year or two after the election unless Obama loses. In that case, he may veto any extension. Senate Democrats may also filibuster any Republican effort to extend them in 2013, leaving the economy to cope with a large tax increase at a time when it may still be fragile.
Clearly, the optimum solution would be a deal this year to replace the automatic budget cuts now in law with a better mix of spending reductions, as well as some kind of tax reform package to replace the expiring tax provisions and get the tax system on a permanent track. But given time constraints and political gridlock, it is hard to see that happening.
One thing is sure. Both sides will use the threat of fiscal apocalypse to energize their voters. How that plays out may determine the ultimate resolution of the nation’s looming fiscal crisis.
http://www.thefiscaltimes.com/Columns/2012/03/02/The-Two-Issues-that-Can-Bring-Down-the-Economy.aspx#page1