If you follow the news you would be led to believe that everything that occurs is a self contained individual event. This is of course not true. Upcoming decisions which will seriously affect the economy which are linked are the new tax bill working its way to the surface and the next chair of the Federal Reserve. This needs to viewed as a single event.

Given recent legislative performance it is probably safe to assume that whatever tax bill is passed by Congress will be a mess. Just some of the preliminary ideas that have leaked make no sense  (decreasing retirement saving incentives) and judging by the Health Care debacle it seems like Congress has lost the ability to do any substantive work on legislation. Health care failed because no one put forth a carefully crafted workable attempt to address the issues involved. The whole process deteriorated into big-guy talk and posturing without any serious attempt to get to the underlying problem. This does not bode well for tax "reform" which is much harder. Consequently the next chair of the Federal Reserve should be closely watched because they will need to craft monetary policy to offset what I imagine will be a hodgepodge of bad ideas on tax policy. Twice in my career (which started in 1972) I have seen the damage the Fed can do under poor leadership, once in the 1970's under Arthur Burns and again in the 2000's under Greenspan. Hopefully the new Fed chair will be a serious person, if not be afraid, be very afraid.