Net debt has increased since 2008. You are forgetting public deficit spending. It is now time to tighten the fiscal belt. Higher taxes (expiration of payroll tax holiday), less spending (expiration of unemployment benefits extension). We'll see how the economy reacts, but I'm pretty confident the ECRI will be proven right on their call.
The Republicans may support the extension of both of those measures--payroll tax holiday and unemployment benefits--but they will demand direct offsets, probably in areas where Democrats will cry foul. They definitely won't be kosher with this "We'll pay for it in 2013" BS. The only reason Obama takes that approach is b/c he knows he is up for reelection in 2012, so he wants all sacrifices to be made at a later date. Unless you think the Republicans are stupid (they are, but not in this way), then you have to be bearish on 2012 IMO. No payroll tax holiday extension means over $1000 tax increase on the entire population. The deficit right now is almost 10% of GDP, unprecedented, and the payroll tax holiday is a meaningful part of the reason for that.
