19 December 2011

When Will They Learn?

Temporary patches never lead to permanent solutions:

Senators racing for the exits after a year of bitter battles passed legislation Saturday that would extend a Social Security payroll tax cut and jobless benefits for just two months, setting the stage for the next fight until February.

There are only two ways to make permanent the (presumed) employment gains that have resulted from this temporary tax cut:  make the tax cut permanent or cause another boom.  Extending the tax cut for two more months only means that the job cuts that will inevitably accompany a payroll tax hike will simply be delayed for two months.

Of course, a boom won’t actually fix the problem, either.  It will simply mask it with cheap credit and the appearance of economic growth.  Therefore, if politicians want the benefits of the payroll tax cut  to be permanent, they will have to make tax cut permanent.  Imagine that.

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