Balancing Act - Barrons.com

HONEST NUMBERS AND DISCOUNTING BACK: Balancing Act - Barrons.com: "- Sent using Google Toolbar"

Sitting here in one of the highly overtaxed countries of Europe where the thought or real economic growth or vitality is totally tax constrained, one does wonder whether the old real estate valuation formula might not also be a required part of budgeting?

In other words, to simplify, take a 10-year present value calculation of income (tax receipt) growth, based on the in effect fiscal policies of the country, and discount them back.

For example, the idea of getting Obama's 700 billion from the rich by letting the Bush tax cuts expire is beyond wishful thinking.

Europe is trying to get government deficits down to 3% of GDP - assuming their economies will grow at this rate. Which again is like expecting a prostitute to be a virgin, year-after-year.

To balance the budget you can either have income discounted back from a growing economy or tax the bejesus out of the economy today and forget having anything to add in from the future.

Clearly, the US is going for the Europe route - head-in-the-sand big deficits and no growth.