Every day that Congress is unable to come together to determine a budget, the threat of the ever looming fiscal cliff and sequestration become even more real, threatening to impose spending cuts that will have an apocalyptic effect on our economy.
What most people fail to realize while discussing this, however, is that the fiscal cliff is a completely fictional, self-imposed and impotent piece of legislation that can be retracted or avoided at any time.
This entire fiscal farce (farce — n: a comedy that aims at entertaining the audience by means of extravagant characters and improbable situations) was first created in the summer of 2011 while our representatives were playing chicken over raising the debt ceiling or defaulting on our debt.
Bruce Bartlett, from the Fiscal Times, discusses how Congress was close to negotiating a deal with about $800 billion in revenue and deep spending cuts, when the “group of six” senators upped the stakes with a much higher revenue plan of $1.2 trillion. Obama backed the new plan and Republicans left the bargaining table.
To solve the artificially created debt ceiling crisis, then, Republicans and Democrats agreed to set up a Super Committee that was charged with finding $1.2 trillion in deficit reductions by last Thanksgiving or else automatic sequestration would kick in — the financial cataclysm that everybody has been raving about recently.
You see automatic sequestration was this death pact Republican and Democrats agreed to if the Super Committee failed to find the necessary deficit reductions. The sequestration calls for tax increases, spending cuts equally split between defense and social programs and an increase to the payroll tax (FICA).
The Congressional Budget Office estimates would reduce the federal debt by $153 billion over the next decade, which sounds like a lot until you realize that’s about what the U.S. government currently borrows every month.
Our representatives have failed to come up with any semblance of a serious agreement about our budget — imagine that — so the fiscal cliff is about to take effect. So if this fiscal disaster is as bad as everybody is making it out to be, why hasn’t there been a deal?
Barry Ritholtz, in the Washington Post, says the term “fiscal cliff” is a misnomer, anyways; “A fiscal slope is more accurate.” The effects of sequestration are not an event that will take place right on Jan. 1, 2013. The impact of the spending cuts and tax hikes will of course be phased in over time.
So there’s not really that much of a threat? No. Especially when you realize that the people who hold the disarming switch to this ticking financial time bomb are the very people it was designed to force into action — our representatives can pass legislation at anytime nullifying the fiscal cliff.
So in all reality, all anybody is doing in Washington is doing is playing politics; and Obama is winning.
Coming off of his election high, things have never been better for the President, who had a landslide victory and even gained a few unexpected seats in the House and Senate.
Obama is demanding that the Bush tax cuts for the wealthiest Americans expire — an objective he’s had since his first term in office — encouraging those earning over $250,000 to “pay their fair share.”
Republicans are vehemently opposed to these tax increases, making it completely likely that we’ll miss the deadline of the Fiscal Cliff during the lame duck session of Congress — which is exactly what Obama would like to see happen, as the next session of Congress will have more of his supporters in its seats.
You see Republicans can easily be blamed for the creation of this financial calamity, and their unwillingness to increase taxes on the wealthiest Americans to avoid the Fiscal Cliff will be pointed to as evidence that the GOP really is run by bourgeois capitalist pigs.
Which is believable, until you realize that the tax increases Obama is proposing is only enough to fund our federal government for about eight days — the President’s proposal will do virtually nothing to solve our deficit problem.
Warren Buffett recently pointed out in the New York Times that the Forbes 400 richest Americans have a combined wealth of $1.7 trillion. It looks like there’s plenty there to tax, right? But Mark Steyn of the National Review points out that even if you confiscated every penny the Forbes 400 had you’d only be able to cover just over one year’s federal deficit — then we’re back to square one.
You see it’s all political theatre, there is no looming, impending crisis. The Fiscal Farce is simply political posturing between the two parties for the remainder of the President’s remaining term. Obama has the GOP on the ropes and is looking to castrate their opposition to his policies.
The only thing Americans really have to be worried about is that the entire county is willing to devote so much time and attention to an artificially created fiscal crisis, when so many other tangible, dire problems continue to exist in this country completely unaddressed and uninhibited.