In what some tax lawyers and financial experts describe as a game of chicken between Democrats and Republicans at odds over raising the country’s debt limit, Treasury Secretary Timothy Geitner, is claiming he is “certain” another financial melt-down is coming. He maintains there is no way to increase the U.S. debt ceiling without raising taxes on America’s wealthiest, and as such, a disaster is eminent.
Another financial catastrophe appears likely particularly given Republican Tom Coburn’s recent decision to leave the “Gang of Six.” As you may recall, the Gang of Six was a group of congressional leaders who were trying to find common ground between the two feuding political parties over the debt ceiling issue. Richard Haass, President of the Council on Foreign relations, agreed Coburn’s decision to leave the negotiations will hurt the U.S. economy.
In a speech Geitner gave Tuesday evening at an HBO screening in New York, he placed blame for the situation on faint-hearted politicians and debt-ridden Americans, rather than where many Americans feel the blame really belongs, with large banks and Wall Street. Geitner went on to say “It [referring to the next melt-down] will come again. There will be another storm. But it’s not going to come for a while.” When asked to elaborate on his answer, Geitner said “You will not know. It’s not going to be possible for people to capture risk with perfect foresight and knowledge.”
While Geitner commented on the perception of most Americans that TARP money was used to reward banks for behavior which nearly drove the country into a deep financial depression, Geitner claims the average American shares much of the blame for getting too far into debt. When questioned why no bankers had been jailed for their roles in causing the melt-down, he observed it’s not over yet. He added, “That chapter’s not written. Don’t reach premature judgments on that…taking too much risk and making stupid mistakes may not be a crime.”
IRS tax attorneys and others question whether taxing the rich is advisable at a time there is still nine percent (9%) unemployment. What’s more, these tax lawyers note uncertainty caused by the political stalemate makes it impossible, at this time, for the business community to confidently invest in our future and help build back our U.S. economy.
Tax lawyers and other say that only time will tell whether Geitner’s prediction bears out, or whether last night’s comments turn-out to be the hysterical rants of an alarmist with a political agenda.
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