Iraq, Katrina and No Tax Increase!

Well the deficit is on the rise again. I am surprised that Bush is still adamant about not raising taxes. I wonder how this determination of Bush will impact the future of this country.

Iraq, while avoidable, is a mistake United States will have to live with. This means bearing fiscal responsibility for the rebuilding of Iraq. This is being reflected in the increased budget deficits. Apart from the fiscal responsibility, of course, there is the emotional side which I will not want to touch on.

Katrina, while unavoidable, reflects years of government neglect and poor disaster planning. So now to make up for the poor planning the federal government and congress are bending backwards; making promises of enormous federal aide to rebuild the area. While the area definitely needs rebuilding, the federal deficit while already high is getter higher.

There in come the taxes. Why is the government not increasing the taxes. While I do think increasing the taxes will probably have a small negative impact on the economic growth in the short term, in the longer term the impact will be smaller. Coupled with the increased demand on oil and the increased deficits I wonder if the United States is setting itself up for a double whammy in the coming years. Already spending on education is being impacted (this will have a small short term effect but a huge long term effect especially considering the competition in technology development coming from China and India)

Dependence on oil is only getting worse in this country. The government seems uninterested in doing anything other than making half hearted attempts at reducing dependence on this resource. Half hearted attempts range from no initiatives being made for mass public transport (which will mean increase in taxes again) and increase in gas mileage from automobiles.

Overall I somehow feel this determination not to increase taxes given the situation this country is, is like ignoring a health symptom which can eventually being a major cause for surgery which may threaten the life of the individual!