Let the entire Bush tax cut expire.
What CSH said -- Although I'd much prefer the Simpson-Bowles approach to raising revenue, plus entitlement reform and large cuts to military spending. That would be a good start.
It's also worth remembering the CBO's description of what would happen if we go over the much-hyped "Fiscal Cliff of DOOOM!!!" Our debt is such a huge drag on our future economic growth, that the fiscal cliff would actually be good for us:"CBO projects that the significant tax increases and spending cuts that are due to occur in January will probably cause the economy to fall back into a recession next year, but they will make the economy stronger later in the decade and beyond. In contrast, continuing current policies would lead to faster economic growth in the near term but a weaker economy in later years."http://www.cbo.gov/sites/default/files/cbofiles/attachments/43692-DeficitReduction_print.pdf
Their short-term description is sensible and in line with other forecasters. Spending cuts reduce GDP directly and tax increases typically hurt short term GDP as well. That's a no-brainer.Their "later in the decade and beyond" projections are nonsense most likely inserted to maintain their image of neutrality and deficit hawkishness. Even a child could tell us (correctly) that hurting the economy now will make it weaker 10 years from now as well. It will give us a couple years of lost growth, shut down businesses, and skill losses among long-term unemployed workers. The CBO tries to specify the reasoning behind their prediction, and it is not convincing at all. They describe the existence of national debt as having a massive negative impact on economic growth, while providing no supporting evidence for this claim. They also run through an embarrassing list of econ-101 style fallacies which were long ago refuted by real research.The highest debt to GDP ratio in U.S. history was attained at the end of WWII. It preceded a long period of very strong economic growth. Not saying I love paying T-bill interest but it's clearly not economic armageddon.I'm not going to make a long term economic projection here, because that is very hard and people who try typically end up wrong. The CBO should not have even brought it up.Summary: The CBO is wrong and their economic forecasts are incompetent. They are qualified to add up short-term budget totals and that's it.
Let's go over the "cliff." Let's repair things a bit more by raising taxes even at the low wnd so people with only a few thousand bucks of income pay SOME income tax -- even if it's only 5 bucks a year. And then let's take people who grumble about all the "takers" in society and sit them rump downward on 3-inch wide 6-foot long stakes without anesthesia.There's a F*****g sickness in modern America that needs to be cured.
At The Washington Post
At The American Prospect