Given weak job numbers, a slowing world economy, and escalating financial stresses from Europe, the Fed will probably act. Since it can’t buy more long-term Treasuries (it nearly owns them all) or increase the size of its balance sheet (Republicans get angry) it’ll renew Operation Twist, which ends in June. The Fed will sell short term-Treasuries and with the money buy mortgage backed securities to help homeowners and the economy.
Tag Archives: Republicans
This Old House
When parties lose majority status in Congress and when a return to majority status looks tough, retirement announcements become common. When the Ds lost their majority in the House in ’94 29 announced they would not run in ’96. When the Rs lost their House majority in ’06 27 Rs did not seek reelection in ’08. So far this year, 17 Ds have announced their retirement. Five to 10 more retirements are expected.
Politics of the VAT
Democrats fear a Value Added Tax because it is very regressive. (That means the poor pay more taxes as a proportion of their income than the rich). Republicans fear a VAT because it can easily raise lots of money — just look at Europe. But, once Republicans realize it is regressive and Democrats realize it will raise lots of money, it may suddenly be hailed as a rare bipartisan solution to our fiscal problems.