Obama proposes a $ 1.6 Trillion tax hike to solve a $ 66 Trillion unfunded liability. He then proposes another $ 2.8 Trillion in Spending cuts. This is the "Grand Bargain" that Obama seeks to strike.
Is this some kind of joke? Besides not making a dent in the entitlement disaster that looms ahead, the tax hike virtually guarantees an economy that will join the European race to the bottom. Why not cut to the chase? France just raised marginal rates to 75 percent. Why don't we follow suit? We will get to that point anyway, in time, with the President's logic.
Instead of fixing the spending imbalance that is causing our national debt to explode, the President has a temporary fix that makes the situation look better on paper for a few months. After a few months, the "Grand Bargain" will become the "National Straightjacket" as it becomes apparent that the higher tax rates reduce economic growth and dramatically lower tax revenues.
Since very little spending reduction takes place, the deficit will move from $ 1.6 Trillion to $ 2 to $ 3 Trillion annually. We will be staring at $ 22 Trillion in national debt by the time Obama leaves office with an unemployment rate within range of double digits. We will not be Greece yet, but we will be well on our way. That is what happens if we put in place Obama's "Grand Bargain."
So, why bother. Let's go over the cliff. The future will be much brighter than reaching for the "Grand Bargain." Let's deal with the emergency now while it has some hope of being dealt with. Time is not on our side in this one.