A Democratic Panic Attack?

“Democrats are trapped by Tim Geithner’s statements that extending low tax rates for successful earners would actually imperil economic recovery.”

Larry Kudlow

…With the announcement this week that Council of Economic Advisers chair Christy Romer will leave the White House to go back to teach at Berkeley, it looks like the center of economic gravity will shift leftward inside the West Wing.

Meanwhile, over at the Fed, it seems ever more likely that the FOMC meeting next week will produce a much more dovish policy statement, one that will lengthen the “extended period” near-zero-interest-rate language and hint at new cash purchases of Treasury and mortgage bonds to increase the central bank’s balance sheet and expand the basic money supply. Already, in recent weeks, the dollar has been plunging.

Of course, Republicans will push harder to keep the Bush tax cuts for the wealthy — as they should. But Democrats are now trapped by Treasury man Tim Geithner’s statements that extending low tax rates for successful earners, investors, and small businesses would actually imperil economic recovery. This is his war against investment and capital formation.

Maybe the Democratic revolt in favor of keeping all the Bush tax cuts will gather steam. But Democrats are more likely to push for greater spending than investment tax incentives. They’d rather take your money than let you keep it…

…So just like the overall economy, the jobs recovery is faltering. It isn’t a double-dip recession. But the story is moving in the wrong direction. And if the Democrats in power push for a big-bang summer surprise that seeks even more failed stimulus spending, they will do much more harm than good…

Read the entire article at CNBC.

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