Much chattering over the politics of former President Bill Clinton's statement urging extension of the current tax rates to avoid recession. But it's really the policy that matters, and on the policy question, he's close to the mark.
In an interview with CNBC, Clinton said the U.S. economy is already in a recession -- although the numbers actually suggest only slow, slogging, slipping growth -- and urged extension of the "Bush tax cuts."
"What I think we need to do is find some way to avoid the fiscal cliff, to avoid doing anything that would contract the economy now, and then deal with what's necessary in the long term debt-reduction plans as soon as they can, which presumably would be after the election," Clinton said.
"They will probably have to put everything off until early next year," he added. "That's probably the best thing to do right now. But the Republicans don't want to do that unless he agrees to extend the tax cuts permanently, including for upper income people, and I don't think the president should do that."
However, Clinton did say that Congress would be best off agreeing, at least for the time being, to extend all the tax cuts that are set to expire at the end of the year, including the so-called Bush tax cuts named after Clinton's successor, George W. Bush.
The approach Clinton suggests would, at best, set the stage for comprehensive tax reform, which would include modernizing and streamlining the U.S. corporate tax system to become more globally competitive. At worst? More kicking the can down the road, which ends at the fiscal cliff, over which the economy could plummet. Or at least hang on a branch like Beetle Bailey. Tax policy needs to be permanent so business can make long-term investment decisions. (Strangely, some columnists are now claiming CEOs exaggerate the problem of "uncertainty." But it's the CBO that reports that without an extension of the tax rates and with the increased spending already written into law the fiscal cliff will take $500 billion out of the economy. No uncertainty?)
Coincidently, just about the time that President Clinton was opining on the looming cliffageddon, the U.S. Chamber's second in command, R. Bruce Josten, sent a letter to Congress calling for an extension of the tax rates:
Failure to act on the looming year-end tax increases would yield the largest tax increases in American history coupled with draconian, ill-designed, across-the-board discretionary spending cuts. Economists from across the political spectrum warn that such tax increases and spending cuts would have a devastating effect on a still sputtering U.S. economy, quite possibly returning it to recession. Moreover, the onset of harm to the economy will not wait until year-end. The very notion that the fiscal cliff exists has increased uncertainty, which has already begun to retard consumer spending and hamper business investment.
We agree with President Clinton and the U.S. Chamber, more or less, cliffwise.
Motion to proceed to consideration of S. 744, #immigration bill, passes Senate by 84-15. Getting right into amendments.
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