Senate Democrats Refuse To Vote On Tax Cuts Until After Elections
This is rather adverse development, as it means some form of non-resolution stalemate on the tax issue will now most certainly be the final outcome: there is very little time in the chaos after elections to actually implement wholesale tax reform. As Goldman highlighted yesterday, the likely adverse impact of the wholesale expiration of tax cuts will impact US GDP adversely by an additional 2% in 2011. Yet Corporate EPS are now completely disjointed from the host economy, as earnings are now completely predicated on wholesale deleveraging. What companies seem to forget is that eliminating the tax shield of debt interest will mean hundreds of billions more in taxes paid to the government. Or perhaps, that has been the government's ploy all along.
A senior Senate Democratic aide told TPM today there won't be a vote on extending the Bush tax
cuts in the upper chamber before the November election, a blow to party
leaders and President
Obama who believed this would have been a winning issue.
It's also a signal that the House won't take action -- though nothing has
been decided for certain, since leaders there have said all along they are
waiting for the Senate.
"Absent a stunning turn of events, we're not going to do tax cuts before the
election," the aide told TPM.