President Obama recently said, “The most important lesson I’ve learned is you can’t change Washington from the inside.” That’s demoralizing to hear when a recession is bearing down on the economy—and it’s an inside job.
The Congressional Budget Office has forecasted a fresh recession to hit next year if Taxmageddon, a nearly $500 billion tax increase, hits the nation and Congress and the President drive us off the “fiscal cliff.” President Obama has done nothing but ignore this warning.
In a new report, Heritage’s J.D. Foster explains that the very fact that we can see a recession coming is shocking. “Economic forecasters almost never forecast recessions,” he says. “Those few who do forecast recessions do so with great frequency and belong to the doom-and-gloom school of economics.” Yet we can see this one a mile away:
What makes this recession different, and predictable, is that the disruptive force is Washington policies and, even more, Washington behaviors—policies and behaviors for which the nation can thank the Congress and especially President Obama. The policy is Taxmageddon. The behavior is intentional, insistent inaction. The consequence is recession. The response should and will be outrage.
The problem is extremely clear. Congress has left town and isn’t scheduled to return until after the November election. With every day that passes, the economy drags, as the uncertainty of January 1 looms.
Economists talk a lot about “uncertainty.” Why is uncertainty such a big deal?
Business owners are looking at next year’s taxes already and thinking they can’t afford to hire. Investors are holding back from expansions and new ventures. This massive uncertainty is holding back all growth and keeping unemployment stubbornly above 8 percent, while millions have dropped out of the labor force because they are so discouraged.
Uncertainty affects your personal finances, too. Think about this: If you’re a middle-class American family, Taxmageddon means that your taxes are going up about $4,100 next year. How does that affect your thinking about traveling for Thanksgiving in a couple of months? Buying Christmas presents? What about saving for retirement or your children’s education?
It starts to hit home that you have to come up with that $4,100 somehow. You’re going to have to make cuts in your lifestyle to be able to pay this tax increase.
The best the economy has to offer right now is a holding pattern. Holding onto our money and holding our breath, waiting for the gigantic shoe of Taxmageddon to drop on top of us.
The President said outside forces were needed to change Washington. But this tax increase—and the recession it will bring—are an inside job. Congress and the President are the only ones who can prevent it.
The House passed a bill that would prevent the largest share of Taxmageddon, but when Congress came back to Washington for the blink of an eye after its August recess, it failed to finish the job. Everyone promptly dashed back to the campaign trail.
As Foster said, “President Obama should demand that Congress return to defuse Taxmageddon, and Congress should immediately heed his call. The job need only take a few days away from their campaigning.”
Visit Heritage’s Taxmageddon page to learn more, see how it will impact you, and see Taxmageddon’s impact on your state.