Debt Ceiling Deal a Prelude to Ultimate Default

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK ( TheStreet) -- President Obama wants a big deficit reduction deal -- a long-term solution to the nation's unbalanced finances. Yet, what the president and Republicans propose -- even if both could accept much of what the other offers -- would only delay the inevitable. Like Greece, America's finances will grow worse and worse.

The U.S. is suffering from not enough growth. At 2%, GDP is advancing at the pace of worker productivity; hence, jobs creation is near zero, wages declining and tax revenues lag growth in government expenses. The big budget busters -- Medicare, Medicaid and Social Security -- will continue to far outpace GDP and tax revenue.

What comes out of budget negotiations could buy time through 2012, but make will make the growth problem worse, not better.

The president has odd ideas -- for example, targeting higher taxes for families earning more than $250,000 a year. Those include many Schedule C small businesses, and those deriving incomes from family-owned corporations, where couples often work a combined 100 hours a week, have much capital at risk and create many of the new jobs -- at least when not scared into not hiring by presidential rhetoric about millionaires.

This arrow to the heart of small business would yield perhaps $80 billion in revenue against a $1.6 trillion annual deficit. That's if entrepreneurs and employees with large incomes do not, as is likely, invest less and work less. Adopt that fiscal Rx, and tax revenues will be less and budget problems greater in the future.

President Obama wants to single out oil companies. Specifically, U.S. businesses get credit for foreign taxes paid (not royalties but corporate taxes paid) against their U.S. tax liabilities -- he wants that curtailed for oil companies.

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