White House Warns of Economic Crisis
Yesterday, as the President’s backroom tax deal began encountering steep opposition on both sides of the ideological spectrum, the White House issued a stark warning. According to CNN, Larry Summers said:
If they don’t pass this bill in the next couple weeks it will materially increase the risk that the economy would stall out and we would have a double dip.
A few points. First, the White House is once again using scare tactics to pressure lawmakers and Americans into accepting a deal crafted behind closed doors. Second, the White House is giving lip service to the connection between economic growth and lower taxes, though a two-year extension is merely a temporary band-aid. And third, the President acknowledged this plan would be less simulative (if possible) than the 2009 so-called stimulus.
At his press conference on Tuesday, the President said:
This is not as significant a boost to the economy as the Recovery Act was, but we’re in a different situation now. I mean, when the Recovery Act passed, we were looking at a potential Great Depression…
Of course, the Great Depression rhetoric is designed to obscure the true impact of the stimulus, which failed to hold unemployment under 8.0%, which is how it was sold to the American people. In fact, since the technical end of the recession (June 2009), our unemployment rate has increased by 0.4 percentage points.
What does all of this mean for conservatives? An increase in tax rates will stifle an economic recovery and the American people have been clear that more spending is not the answer. Congress needs to trust the American people and verify this deal lives up to November’s mandate.