Tuesday, January 26, 2010
Wall Street Journal op-ed, An Economic Time Bomb: Even If Congress Does Nothing, Tax Hikes Will Hit Hard a Year From Now, by Pete DuPont (Chairman of the Board, National Center for Policy Analysis):
Weather-wise it has been a very cold January, and politically the Scott Brown Senate victory has chilled Washington Democrats even further. But if the Democratic economic policies continue nevertheless, this year will be nothing like the bitter economic January we will be living in a year from now.
Government spending has already hugely increased, and so has the size and scope of government, but next year there will also be substantial tax increases for a great many Americans. ...Add on to all of these increases the biggest government deficits and spending increases (to 26.5% of gross domestic product from 21%) in half a century, the protectionism of free trade downsizing through the "buy American" requirements, China import restrictions, and the administration limitations of Columbia, South Korea, and Panama free trade agreements, and we have a very different, and not very prosperous, America ahead of us. ...
[W]hen the huge tax-increase agenda arrives a year from now, the economy will begin to decline, and will be some 3% to 4% smaller than it otherwise would have been. The artificially high growth in 2010 followed by artificially low growth in 2011 would "represent a larger collapse than occurred in 2008 and early 2009," Mr. Laffer writes.