As America’s crazed 13-month election mania kicks-in, politicians enter into a frenzied bidding-war to purchase votes by offering free bread and circuses to the median voter. Extending the temporary payroll tax-cut is a highly favored spectacle for the 2012 games. $100 billion here, $200 billion there! And I retain my seat for another two or six years of personal wealth accumulation!
The economic argument against this circus is absolutely overwhelming. The national debt of the United States has already been downgraded, justifiably, by reference to default risk criteria. So the circus actually has to be funded. Since the proposed millionaire tax would be spread over 10 years, pay as you go for that policy proposal is not even on the table. Since Medicare reform must be part of any long-term solution to the existing debt problem, charging higher fees to the better off is deceitful unless the additional premia will exactly offset the payroll tax reduction bill in 2012. And that is not on the GOP table. So, either way, the payroll tax-cut will add to the national debt. Bad economics.
Only hydraulic Keynesian remnants believe that temporary tax cuts will stimulate economic recovery. Pull your heads out of the sand you haybags! A wealth of empirical evidence indicates that households increase consumption expenditures in response to permanent, but not to transient income increases. So, as in the recent past, temporary payroll tax-cuts are largely saved or used to pay down debt. Only hydraulic Keynesian remnants believe that future decade-long tax increases on the most productive members of society will have no drag effect on investment decisions. Expectations matter, Larry Summers, Christina Romer, Joe Stiglitz, Paul Krugman, Bradford De Long and all the rest of you Keynesian economic dynosaurs. Bad economics, once again.
Edward Gibbon marks the beginning of the decline of the Roman Empire with the death of Emperor Marcus Aurelius in AD 180. Thereafter, his corrupt successors indulged Rome with an ever-increasing sequence of circuses and ‘free’ bread.
The beginning of the decline of the American Empire began in AD 2000, with the accession to office of a ‘free’ bread and circuses president. Wake up America, read the history books, and move swiftly to put an end to wealth-degrading popularity-buying by corrupt politicians. Only you can stop them from ruining the economy of a once-frugal and proud nation.