Coming Up Lame

Some people never learn.  When you have assembled a large group of these folks together, we refer to them as the U.S. Congress.  And what a fun bunch they are.  Always carrying on, bickering, name calling and blaming each other for all the same things neither of them actually did.  Not that any of them really wanted to do something if it endangered their chances for re-election.  Which brings us right up against the dreaded “Fiscal Cliff” I recently discussed in one of these missives.

Over the past few years as the various interests which comprise our Congress have reacted to their constituencies and occasional cattle prods from both the Bush and Obama administration, a series of temporary fixes have been introduced into our nation’s economic landscape, all in hopes that they will somehow rouse a phoenix from the ashes of the Lehman/AIG disaster we endured a few years back.  Since no single bullet proved magic, various programs were layered over one another in hopes that they would act in concert to spur our economy back to robust health.  Didn’t happen.  Interestingly, what will happen if Congress doesn’t get their act together soon, is that 42 of these goodies shall expire simultaneously at year’s end.

One stimulus measure designed to get ordinary folk to spend their hard earned dollars lopped a couple of points off the payroll tax for which individuals get dunned every payday.  The full deduction will get reinstated come January, removing approximately $1,000 from the average family’s take-home pay each year.  Other measures slated to go into effect include raising the capital gains and dividend tax rates, jumping the estate tax up while substantially reducing the amount which is exempt from it, and adding a surtax on folks with high incomes.  In addition, this last group can look forward to an additional (and not inconsequential) tax on investment income to pay for the new healthcare bill.  Even if you have no income you may feel the effect since extended unemployment benefits are slated to be axed as well.

It is now moot whether or not any or all of these stimulus measures should have been introduced to begin with.  What seems to be of primary importance at the moment is for both individuals and businesses to have a clear view of fiscal policy going forward so that they may plan their savings, spending, retirement, and investment strategies for future years.  None of that can happen with any assurance until Congress acts and that august body seems hopelessly deadlocked in pre-election positioning which precludes any immediate substantive action. If this continues to be the order of the day, that takes us into November, leaving little time for such momentous action before terms expire.  Most likely they will choose to enact a short-term blanket extension which stretches into March of so of 2013, after the next Congress has convened.  That is hardly the type of decisive action needed to pull our economy out of its current funk, but how far do you think a lame duck can kick a can?