By Ralph Schwartz
Before this morning, I’d assiduously avoided reading much about the looming fiscal cliff, and now I know why. Sub- or semiconsciously, I realized the debate is pure political showmanship. (Kind of a “He (Boehner) said, she (Pelosi) said.”) Not interested.
But it’s worth asking: If we fall off the cliff, what will happen?
It appears that indeed, Congress won’t do anything before the New Year to avoid the cliff.
Bear in mind the cliff is not directly about the debt crisis. First and foremost, it is a set of steep revenue cuts and tax increases intended to address the debt problem. Observers seem to take it for granted that if these cuts/increases go into effect, the economy will slow down.
Here’s the nuts and bolts of what the cliff entails, with limited discussion of what will happen to the economy after.
At least one futures market has reacted to the expectation that the cliff likely won’t be avoided. The price of oil fell today. The stock exchanges aren’t doing well, either.
Why the concern for an economic slowdown or even a recession? For one, taxes for 90 percent of Americans would go up by $3,446 on average. On the expense slashing side, unemployment assistance would end for some, salaries of federal employees would decrease, student loan programs would receive less funding, etc. Many safety net programs, such as Medicaid and food stamps, can’t be touched.
What might be lost in all the hand wringing is the fact that the fiscal cliff is an artificial construct that politicians can postpone with a wave of their hands.
Oh, and the Treasury Department just announced that the debt ceiling will be reached on Monday, Dec. 31, meaning the department must take “extraordinary measures” to borrow enough money to get the U.S. through the first two months of 2013. Then, the concern becomes the country defaulting on its debts.
Unless, of course, Congress and the president agree to take action.
Happy New Year, everybody.
Getting politicians of all stripes to actually cut spending, is like trying to talk a Tiger into becoming a vegetarian.
We do have a pending problem, and without restraints of some sort or another, we are facing enormous problems.
We cannot continue to spend more than we take in, which has by all accounts been accelerating under President Obamas leadership.
Every spending cut Obama proposed, is actually an increase in spending. 2+2=4
If there way any other way to get the politicians to restrain their spending, I am all for it, but if the ONLY way to get them to quit spending is the cliff, then I am for throwing them off of it.
This spending cannot continue unchecked by adults.
Raising taxes is easy, and I am willing to support this, but not with out spending restraint. Real spending restraint.
The unconstrained spending will eventually ruin our economy, so we might as well grab the steering wheel and take the drunks with us over the cliff with us.
By the way, there are a lot more taxes coming on Jan 1, then just the Bush tax cuts expiring. ie. Obamacare
We have had three debt Commission that cost millions, and any of which were well thought out, bipartisan, balanced, and I could live with. The President has rejected them all.
If we go off the cliff, the electorate will be furious, and they should be, which will send to politicians back to actually get this job done.
While Obama won the election, our Founding Fathers only gave him control of approximately a third of our government for good reason. He needs to play fair with Congress, as they also were elected by the people and won their elections.
Contrary to popular opinion, elections do have consequences, and that include electing fiscally responsible House of Representatives.
The Founding Fathers clearly envisioned the House of Representatives to be the foremost thermometer of the electorates temperature, and the majority of the House of Representatives were sent there to rein in government spending.
The people have spoken, and Obama is not the only disciple of the people.
We must get spending under control, or we are eventually doomed to collapse our economy, which would profoundly effect every one, except maybe the uber-wealthy.
The debt limit been dysfunctional but at least there was a number on it. Not having a cap on a credit card worries me even more than higher tax rates.