Comment: Fiscal Cliff = 1937

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Fiscal Cliff = 1937

Congress should have a policy of abiding by the political equivalent of the Hippocratic Oath which instructs physicians to "First Do No Harm". The economic recovery, weak and tepid as it is, is nevertheless producing enough additional tax revenue to have reduced the federal budget deficit by $206 billion in fiscal year. All else being equal, if you extrapolate that deficit reduction out by 10 years you have more than $2 trillion without any spending cuts or any tax increases. Austerity, in the Euro-Zone has not worked out so well and budget deficits in Greece, Spain have only gotten worse because tax revenue continues to collapse as the depression deepens. The same will happen here in the US if Congress and the White House impose austerity at this time. We'll go back into recession and ironically the budget deficit will get bigger again because tax revenue will collapse. If history repeats itself, this could end up being like a replay of the 1937 recession within the depression.

Ed Rombach