Kiss your wallet goodbye…
Daniel Gross looks at the massive deficits America voted for yesterday.
Perhaps the least-surprising news of the night: As soon as it became clear that Republicans would regain the Senate, Iowa Republican Sen. Charles Grassley told CNBC that making last year’s tax cuts permanent would be a key item on the GOP agenda.
The prospects have similarly improved for several other Republican economic projects that have been bottled up by Senate Democrats, including tax breaks for investors who have taken losses and tax cuts for profitable corporations.
Such moves may or may not help jump-start the sputtering economy. But they will virtually guarantee a return to the era of structural budget deficits. That may be the most far-reaching economic implication of yesterday’s unexpected Republican sweep. We are now blessed with a Congress and executive branch devoted to the proposition that the government should spend, but not tax. (And what’s more, it shouldn’t try too hard to collect the taxes that are owed, especially if they’re owed by companies or the cheating wealthy.)
Last month, the books were closed on a disastrous fiscal 2002. The government ran its first deficit since 1997â€”$157 billionâ€”and the $6.3 trillion, 10-year surplus that President Bush inherited all but evaporated.