Courtesy of Dr. Paul Price of Beating Buffett and Market Shadows
Obama wants to drive over the cliff.
America is awash with hope that our newly re-crowned King will come towards the center and avoid the dreaded 'Sequestration.'
That term is spoken of as if it is toxic. People seem to forget that it was deemed the solution to the debt ceiling negotiations during the summer of 2011. Those opposing its imposition now are the same ones who passed it in the first place.
But I digress. Here is why our leader has no desire to settle this affair before it gets put into effect.
- It will impose tax hikes on everyone who pays federal income taxes (not just the 2%)
- It will cut entitlements without his having to support the actions
- It will reduce defense spending without him 'looking soft' as Commander-in-Chief
- It will end the 'Bush Tax Cuts' automatically
- It will probably slow economic growth (GDP)
Why would our President want these things to take place?
- He would get the extra tax revenues to use without being blamed
- He could not be held accountable for breaking his ubiquitous pledge to never raise taxes on the bottom 98%
- He would not be the one cutting entitlements, it would be 'out of his hands'
- He prefers to cut defense spending rather than social programs
- He can later 'give back' tax cuts to the Middle Class
- He can then call them the 'Obama Tax Cuts'
- He can blame those damn 'Obstructionist Republicans' for the next recession
For B-Rock the Sequestration is a 'Dream Act' to accomplish many of his goals and dreams without any accountability. Every negative can be blamed on the Republicans even as he allows his stated preferences to be overridden by the forced actions imposed on him.
We haven't seen political agility this devious since Bill Clinton asked everyone what the meaning of 'is' is.
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Dr. Paul Price Nov. 8, 2012
Paul is a new contributor to our newsletter Market Shadows.
Dr. Paul Price - Biography. Dr. Price is a featured columnist on business days on TheStreet's Real Money Pro web site. His work can be found at his blog, Beating Buffett, Seeking Alpha and Phil's Stock World.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Business relationship disclosure: This article was written by Dr. Paul Price who is a new contributor to the Market Shadows newsletter.