Many in the mainstream media appear to be in the bag for the re-election of President Obama. They also appear to not have thought through the consequences of their wishes, both to the nation and their own careers.
The Congressional Budget Office (CBO) and many leading economic forecasters have predicted that we are likely to go into another recession by the first quarter of 2013 if the administration and Congress allow the economy to go off the "fiscal cliff" at the end of this year.
Unfortunately, it now seems to be almost a certainty that this will happen if President Obama is re-elected. Here is why: The president and many of his congressional allies have indicated that they will not extend the current tax rates (the so-called Bush tax cuts) unless the Republicans agree to increasing tax rates on those making $250,000 or more per year. The Republicans will control the House during the lame-duck session and are likely to continue to do so after the election, and they will vote for bills extending the current tax rates for everyone. The Democrat-controlled Senate will not vote for keeping the current rates for everyone, resulting in a stalemate.
If Mr. Obama is re-elected and even if the Republicans happen to win the Senate and vote to keep the present tax rates, the president says he would veto it. The result would be a large tax rate increase on Jan. 1. This tax increase, combined with the expiration of the current lower rate on payroll taxes (which almost no one is fighting to keep), combined with massive new regulations, are almost certain to throw the weak U.S. economy back into a long and deep recession.
Mr. Obama and many in the media seem to be clueless when it comes to the consequences of the administration's economic policies. The president recently said on David Letterman's TV show that the "deficit is not a problem now but will be in the future." He does not seem to understand that the Federal Reserve's response to the growth in spending and the deficit has had the same effect as a massive tax increase on savers, who tend to be the most responsible citizens. The Fed has held down interest rates by buying massive amounts of government bonds, which has destroyed the return on savings for most Americans, causing great hardship on those who have relied on their past savings to generate interest income for retirement or other purposes. Funding the deficit has also been a massive misallocation of what should be productive capital, causing much of the current stagnation.