Former Reagan Adviser Malpass: Fiscal Cliff Accord Means Higher Taxes, Higher Spending

Wednesday, 02 Jan 2013 01:12 PM

By Dan Weil

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink
The fiscal cliff agreement approved by Congress is the worst of both worlds – increasing taxes while boosting spending at the same time, according to David Malpass, president of economic consulting firm Encima Global and former deputy assistant Treasury Secretary during the Reagan administration.

“[T]he damage can't be undone,” he writes in The Wall Street Journal. “Taxes are going up for all working Americans. And so is the size of government.”

The increase in payroll taxes assures that even the middle class will owe more to Uncle Sam, Malpass says. And spending won’t be cut.

Editor's Note:
The IRS’ Worst Nightmare — How to Pay Zero Taxes

“[T]he president made clear that his goal isn't to get business going again but instead to expand government and redistribute income,” he writes. And he doesn’t foresee Washington making any progress on budget issues in coming months.

So what’s the solution? Congress should insist on a debt-to-gross domestic product limit, he suggests.

If that limit is broken, the president should have the right to underspend congressional appropriations and propose fast-track entitlement reductions. But the president would have to provide public monthly reports on excess spending and government employees earning more than $100,000 wouldn’t receive raises.

In the financial markets, meanwhile, the dominant sentiment is relief.

“We sold off on the uncertainty of what it means to go over the fiscal cliff and that’s been removed,” James Paulsen, chief investment strategist at Wells Capital Management, tells Bloomberg. “We’re re-valuing the [stock] market based on what’s closer to the underlying economy.”

Editor's Note: The IRS’ Worst Nightmare — How to Pay Zero Taxes

© 2014 Moneynews. All rights reserved.

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web
Join the Newsmax Community
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Retype Email:
Country
Zip Code:
 
You May Also Like
Around the Web

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved