December 16, 2010
The Post showed once again why it is known as “Fox on 15th Street” when it used a front page news story to tell readers that members of Congress:
“acknowledged the need to avoid expiration of the Bush tax cuts and the likely shock to the economy that would result.”
It may be the view of the Post’s editors that there is a “need” to avoid expiration of the Bush tax cuts, but this is not an objective fact about the economy. While the expiration of the tax cut without any other action by Congress would be a hit to the economy, the impact is not larger than other negative shocks that the Post has largely ignored in the past, such as the collapses of the housing and stock bubbles or the run-up in the value of the dollar in the Clinton years.
It is also important to note that the failure to approve legislation now does not preclude Congress from acting next year as the Post’s article implies. If the economy remains weak, as is likely, there will be substantial pressure on Congress to approve additional stimulus. It is highly unlikely that Congress would do nothing if the economy stagnated and unemployment continued to rise. There is no precedent for such behavior.
Comments