He's calling it the January 1st Armageddon. Creighton University Economist Dr. Ernie Goss says what happens in Washington over the next few weeks will have an impact on everyone’s pocketbook.
"We are talking about the so-called Bush tax cuts that end January 1st. Talking about the payroll tax cuts that end January 1st. We are talking about the mandated spending cuts that would be in terms of defense and then some of the health care expenditures; those go in place on January 1st. On the monetary side we've got the twist, Operation Twist which ends January 1st which means long term interest rates will likely go up on January 1st."
The Obama Administration is pushing for tax cuts for those in the middle and lower income brackets and increase taxes for those making $250,000 a year, about two-percent of the population. Dr. Goss says the problem here is that 2-percent does an awful lot of investing that provides opportunity and jobs. He says the payoff for taking that risk looks bleak.
"January 1st the taxes on those making more than 50-thousand dollars on dividends goes up to 44-percent on the federal and on state taxes, that is 50-cents on the dollar you are paying for investing and taking a risk on our economy. That is not, not wise policy."
Dr. Goss says the nation continues to struggle to recover from the recession.
"We were already at about one-and-a-half percent GDP growth. We should be growing two to three times that rate of growth coming out of this recession. We often hear "well, it was such a deep recession and that is why we are not growing more positively". No, no, no. It is the opposite of that."
Dr. Goss says when a nation comes out of a recession there should be a "slingshot effect" where the economy booms.
(Copyright 2012 by The Nebraska Radio Network. All Rights Reserved.)
