The fiscal cliff: blessing in disguise?

(L-R) U.S. Rep. Timothy Walz (D-MN), U.S. Rep. Joseph Crowley (D-NY), U.S. Rep. John Larson (D-CT), and U.S. Rep. Xavier Becerra (D-CA) hold a news conference on Capitol Hill on December 4, 2012 in Washington, DC. The Congressional leaders spoke on their desire to avoid the fiscal cliff.

Since the last fiscal cliff style debate, in which the entire media world clamored about whether to raise the debt ceiling, Congress has managed only to kick its budget woes a little further down the dusty trail of fiscal doom.  The only thing representatives in Washington have managed is to come up with since is yet another opportunity not to take their badly needed medicine.  Rather than making the hard decisions of leaders, allowing some projects to fall and budgets to be strategically constructed, they have chosen the path of reelection: no responsibility has been taken to rectify the country’s fiscal nightmare, and debate has held tightly to partisan lines.

Present discussions around the fiscal cliff include raising the age for Medicare eligibility and the reorganization of loopholes and tax exemptions.  A new proposal has been put forth by the Republicans to raise taxes by 1.6 trillion dollars over 10 years and includes 0.8 billion in budgets cuts.  Both parties are keen to keep the Bush era tax cuts.  Both parties predictably claim that their opponents are not “serious” about negotiating however, and claim that plans put forth for consideration are meaningless without the inclusion of some crucial element.  For Obama and the Democrats, this means the inclusion of increased tax rates for the wealthiest Americans.

The partisan bickering points once more to a government torn between two factions, each as incapable of governing as the other.  Without a doubt they will be able to come up with some false plan to kick the can even further before the 2013 deadline, but a cliff may be just what is needed to shake them up.

The idea of trillions of dollars’ worth of cuts in defense and entitlement spending may seem scary to a politician, but no economist can come up with a plan to set the US government on a path to a balanced budget and reasonable debt levels without cutting expense in both areas.  It is widely agreed that both are inflated.  Social Security especially is broadly recognized as an unsustainable program that is bleeding the coffers dry.  At present, only the input of a dwindling working population is keeping afloat the retirement promises made to an expanding group of baby boomers.  Either the promise must be retracted, or the plan will have to change.  Both parties seem to at least pay lip service to reality as recently it has even become politically feasible to mention “the end of Social Security” in political rhetoric.  Such an event would be unheard of five years ago.

Republican pundits may disagree, but a vast number of Americans, and many of their representatives are certain that the defense industry is just as bloated. With a long history of support and a war culture to drive it, spending on defense dwarfs the combined comparable funds used by governments of leading developed nations for similar purposes.  The defense budget of the United States literally could take a trillion dollar hit and still remain better funded than most governments.  Even if it were slashed in half, the US would still spend more on defense, as a percentage of GDP, than China, the next highest spender.

The issue of course is that the looming fiscal cliff slashes budgets in haphazard and unproductive ways.  Were the US military forced to take the leap, it would be unable provide a force capable of policing the world, but would maintain its preeminence.  This however is one of the hard questions Congress has been tasked with facing.  What is and should be the role of the US military over the long term?  Congressmen and women have repeatedly shied from their duty to establish it, while catering to the defense industry, defense manufacturing jobs at home, and the millions of soldiers who serve and vote.

For Americans watching the country slide closer to the cliff the ineptitude of their elected officials may be just what they need to insure a great leap.  Congress has been impressively capable in the past of establishing programs and promoting projects, then writing a budget to fit their plan (a practice that is backward to any other business or entity engaged in financing itself in the country) and only then finding ways to pay for it, generally without great success.  Perhaps it is time to set Congress straight by reversing their process.  If the cuts do indeed take place, Congress will be forced to work with the funds it has, and a sorely reduced program schedule, before it begins to dream up new schemes to insure their reelection.

Citizens with a mind towards a balanced budget, regardless of the impact to programs, may find the leap preferable.  Strangely, politicians may find it politically advantageous as well.  Neither party finds it politically palatable to work with its opponent at present.  After Mitt Romney’s defeat in the Presidential election, Republicans especially must prove their unwavering conservativism.  They are most likely to attempt this by pointing fingers at Democrats for inadequate proposals, and generally do-nothing-ism.  They cannot thus be held responsible for wavering convictions and may, as a result, maintain their seats.  Politically advantageous decision making may, this time, guarantee a fiscal solution that benefits state finance.

About the author

Profile photo of admin
up up up

Leave a Comment

Powered by WordPress | Deadline Theme : An AWESEM design

Skip to toolbar