Sadly the Obama "Buffett Tax" plan will likely be a non-starter with the Republican controlled Congress. It should be stated however (In fairness to the Republicans) that increases in taxes are probably not what is needed in the economy today. Although leaders such as John Boehner would cringe at the alternative notion that further spending was likely needed to stimulate the economy - the greatest fear voters should have is if nothing is done at all.

The Negative Consequences of Inaction
One of the great problems the United States faces today is the concern revolving around the deficit combined with the sluggish economy and high unemployment. The trifecta of maladies would seem to present themselves as irreconcilable, but that need not be the case. Given the very unfortunate circumstances that led to the debt-ceiling showdown in August (and subsequent creation of the deficit reduction super-committee), Congress may choose not to act and let the budget axe fall across the board on spending programs. It is fairly certain such an outcome would prove disasterous to the nascent economic recovery.

A Faulty Understanding of Economics Part of the Problem?
One fundamental issue which seems to be constraining Congress and politicians in general, is a fundamental misunderstanding (or perhaps misapplication) of economics. While it may be politically advantageous to decry the astounding debt levels or worry about the out of control entitlement programs what may truly be the problem is a simple scarcity of money in the economy. While it may seem like a good idea to balance the budget and pay our debts like good Americans, US government debt is not the same as household debt. Further, it is a fundamental mistake to think of Treasury debt as household debt, because they simple are not.

How is this the case? It comes down to the old saying, "Money doesn't grow on trees." That old saying may be true for people like you and I however it is not true for Uncle Sam. At the press of a button on a computer, Uncle Sam can literally create an infinite amount of dollar bills to make good on its promises. You would argue that printing an infinite amount of dollars would be extremely irresponsible and inflationary, and in a closed economy I would have to agree. On the other hand we do not exist in a closed economy, and other factors must be taken into consideration when contemplating any sort of Buffett Tax or appropriations bill.

The Effects of Modern Monetary Theory on 2011 Budget Discussions
One of the notions that political leaders like President Obama and Speaker Boehner will have to comes to grip with is the impacts of a deflationary asset bubble in the heavily leveraged real estate sector. Like the insoluble tax versus spend dilemma faced by Congress, average Americans are faced with the question: "Do I pour more money into a mortgage on a house that is never going to be worth what I paid for it?"

Obviously for many Americans the answer is no. That leaves banks and investors sitting on piles of worthless mortgage securities. Banks are also highly leveraged, and are stuck between a rock and a hard place: they'll never collect full value on the properties they hold loans on, yet they can't simply write off the loans either because they'll be insolvent.

The bottom line is all of the players in the US economy (save one) are trapped and unable to move forward, and this is where the critical difference lies between businesses and households versus the US Government. Unlike banks, businesses and households who are unable to pry themselves out of the leverage trap they're in, the US Government has the power to literally physically replace the leveraged real estate and mortgage securities dollars which have evaporated into nothing. It does not take any Buffett tax (although the sentiment is nice). It does not take an infinite amount of Obama spending on bridges to nowhere. According to modern monetary theory all it takes is the press of a button and some well thought out US Government investment and spending on its people.