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Tax ‘Compromise’ Will Accomplish… Further Disaster.

Businesspeople know that the proposed tax compromises will accomplish exactly nothing and will not result in any real measure of economic recovery or higher employment.

Why?

Two Year Tax Cut Extension: most businessmen plan considerably further out than 2 years. Giving them an additional 2 years of ‘tax relief’ will not free up capital for hiring – it will simply give them 2 more years to save and prepare for the disaster that will follow immediately after (or before) the 2 year extension runs out.  Very few will hire due to this time-limited tax break and the following item tell you why…

Thirteen More Months Unemployment Coverage: Hey, the price tag is only $57 billion or so. No pay-go since it’s an ‘emergency’ so everybody’s happy, right? But what they are keeping quiet is that 20 states are already deeply in debt to the federal government for loans to cover their portion of weekly unemployment payments. And that’s not all. The employers pay a component of unempoyment payments in the form of ‘premiums’ (it’s represented as ‘insurance’, but is simply wealth transfer). Michell Malkin writes today of one employer in Colorado whose quarterly ‘premium’ rose from $497 to $2200. So from the employer’s perspective, almost all those tax savings will be spent in advance on those (more than four-fold) higher unemployment insurance premiums.  So if you think it’s OK to go ahead and borrow another $57 billion or so from the Chinese, just remember the 20 states that will be borrowing their part of these payments from the Feds.  The Feds, of course, will borrow this money, too.  If you still think that’s OK, then I have a hunting lease in Drowning Creek, OK I’m ready to to sell you.

When you add in the revenue losses of the 2% payroll deduction decrease for social security – an outright bribe – and the poison pill of the stimulus extensions, we have a deal that Republican leaders should simply walk away from.

And nothing has been said anywhere about friendlier policies towards business as part of the package.  Administration and Congressional officials are on a crack high if they think good business policy is not part of the package that will lure businessmen and investors to take a few risks with hiring.

After all, if you take $57 billion here and $57 billion there, pretty soon you are talking about some real money.

As Jimmie Bise over on HotAir writes, getting to a balanced budget is much easier than most of us thought.  That would be one step in the right direction.  But if we don’t take stern measures soon, we will discover that just meeting our interest payments leaves us little left over for meeting traditional government obligations.

Businessmen who are trying to plan their way around these impending disasters know one thing: it’s better when our governments stresses and supports social mobility instead of social warfare.  Most businessmen are folks who could have played the solical warfare game, but opted instead for the social mobility game – that’s why they are empoyers.

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