I can’t help but think that Seinfeld is once again representative of life. As our economy perilously hangs close to falling back into recession, the famous Season 4 episode “The Implant” comes to mind:
Timmy: What are you doing?
George Costanza: What?
Timmy: Did, did you just double dip that chip?
George Costanza: Excuse me?
Timmy: You double dipped a chip!
George Costanza: Double dipped? What, what, what are you talking about?
Timmy: You dipped a chip. You took a bite. And you dipped again.
George Costanza: So?
Timmy: That's like putting your whole mouth right in the dip. From now on, when you take a chip, just take one dip and end it.
George Costanza: Well, I'm sorry, Timmy, but I don't dip that way.
Timmy: Oh, you don't, huh?
George Costanza: You dip the way you want to dip. I'll dip the way I want to dip.
Timmy: Gimme the chip!
Robin Harding in today’s Financial Times shed some much needed light on the recent deficit reduction/debt ceiling rising compromise. For instance, the discretionary spending cap for 2012 amounts to only $25billion on $1,043billion amounts to a whopping 2.3%. I doubt that amount of spending cut will truly inhibit job growth or decrease our debt. Did you know that 2/3’s of the total spending cuts occur 2017-2021, and 1/3 will occur over the next five years? In other words, it will be up to future congresses to make the tough cuts. Who knows where our economy, our political landscape, and the global picture will be in six months, let alone six months. In other words our big deal wouldn’t even make Carol Merrill show us what’s under the box. As Harding concluded: “The long-term deficit, meanwhile, will have to be addressed in terms of the factors that truly influence it: tax revenues and spending on health and support for an ageing population. For all the sound and fury, the real fiscal argument in Washington has barely begun.”
If what the pundits tell us is true, that American businesses are not hiring because of regulatory uncertainty, who is to blame? Healthcare reform and financial reform were already passed and the only uncertainty is whether Republicans will continue to push for out and out repeal or simply defund the new regulations. As for tax reform, all parties agree that flattening the code is necessary and the only reason why it hasn’t moved further is special interests are jockeying to make sure their clients aren’t adversely affected by any changes. So the uncertainty is coming from the very people who blame uncertainty.