Well, President Robin Hood, er Obama, got what he wanted. He managed to increase taxes without any corresponding spending cuts despite the fact that the understanding all along was to match tax increases with a roughly one-for-one reduction in spending. Furthermore, he has made it clear that he wants even further tax increases as a condition for any spending cuts. Yep. Now that he has been re-elected, the gloves are off. He has become emboldened and more feisty. Any doubts about his political intentions have been laid to rest. Let’s hope that our country’s economy will not be laid to rest as well over the next four years.
The President intends to push his wealth redistribution beliefs and policies as far as he can. At his core, he is still the Chicago community organizer. Simply put, he wants to take from the achievers and give to the non-achievers. (Yes, there are some people who are legitimately in need of government assistance, but I am not talking about them.) Our President has failed to understand that when you become the President of the United States you are the President of ALL the people, not just a segment of them.
The President believes big government should provide everything for everyone, cradle to grave. His economic model is the socialism practiced in Western European countries. He fails to see or chooses to ignore that that system has not worked. This is not opinion or speculation. It is empirical fact. Just look at Greece, Spain, Portugal, etal.
CONCLUSION AND PREDICTION
The President now talks about the need for even further tax increases and pays lip service to spending cuts. Everyone knows the three biggest expenses are debt service, entitlements and the military. Debt service cannot be cut; in fact when interest rates increase, as they inevitably will since they are at historical lows, debt service will increase. That leaves entitlements and/or the military. The President and the Dems will strongly resist any reductions in entitlements; in fact, they want to increase them. The GOP will likely resist any meaningful reductions in defense. So, it will be extremely difficult for our elected officials to agree on any significant reductions in the $16 trillion debt. In fact, we’ll be lucky if it doesn’t spiral out of control further.
Don’t be fooled by the recent surge in the stock market. That was a “relief rally” over the government reaching a deal. Apparently, a “half-assed” deal was viewed as being better than no deal. Eventually, the market will realize that the debt crisis was not solved, just deferred, and the gains will be reversed, or worse.
So, if you thought the fiscal cliff negotiations were difficult last week, just wait until the next one at the end of February when we will also have to deal with Congressional authorization to increase the debt ceiling. Once again, we will be subjected to more rhetoric, half-truths, finger-pointing, and lack of leadership by both the Congress and, especially, the President.