In a stunning admission of the obvious, a majority of Wall Street bond dealers believe spending cuts alone cannot solve the U.S. budget deficit and tax increases must be part of the mix.
There is unfortunately no room for compromise with Republicans. U.S House speaker John Boehner has said tax increases are off the table, “NO NEW TAXES.” They aren’t even willing to reduce or cut subsidies to oil and gas corporations.
“I would ask Republicans to come up with new revenues that don’t undermine incentives to work and invest. And I would ask Democrats to recast entitlements in a way that doesn’t compromise the social safety net,” said Bob DiClemente, head of U.S. economic and market analysis at Citigroup in New York, according to Reuters.
This admission comes as no surprise to liberals and progressives who put forward a budget called, the “People’s Budget”, which cuts spending AND raises taxes while preserving our safety net.
While the GOP is mired in tea party tantrums, Wall Street and progressives have found common ground, hell has officially frozen over.
This Wall Street announcement comes on the heels of an article I reported on earlier showing that the United States is actually one of the lowest taxed countries in the industrialized world.
In that article, I reported that the United States tax base is 24% of GDP, third from the bottom in the OECD, only Mexico and Chile have a lower tax percentage than us.
We do not have a spending problem in this country. We have a revenue problem exasperated by the recession and generous tax cuts to the very wealthy. Once the economy starts growing, the tax base will grow and the deficit will disappear.
Republicans will continue to cater to the fringe and oppose any and all tax increases. This obviously is due to their ideology that tax increases will kill job growth and tax decreases create job growth, but both arguments have been proven false.
Wall St. wasn’t specific on what taxes needed to go up and by how much, but I can almost guarantee that capital gains will remain the same or reduced under their plan and increases will occur on excise tax and income tax on the middle class.
In fact, bond dealers don’t want the increase for the good of the country. They are bond dealers. They buy US bonds and if the US government defaults, they lose money. Wall Street is still a self interest group, nothing has changed, but it’s nice to hear them admit something that liberals have been saying all along.