So what’s all this talk about a “fiscal cliff”? Who’s trying to scare us about what’s happening at the end of the year? Well, it turns out that the Fed Chairman, Ben Bernanke, first described the coming combination of tax hikes and spending cuts as a “fiscal cliff.” He didn’t coin the term, but he was the first to apply it to what may happen. And there isn’t universal agreement that it’s the best way to describe it. There are many who prefer “fiscal slope.” I like “fiscal downshift.” Still moving forward, just a little bit slower.
Despite Republican denials, the stumbling block is clearly the tax cuts for the top-most income earners. The GOP liked the Bush Tax Cuts because it meant their rich benefactors didn’t have to shoulder so much of the financial burden of running the country that made them so fabulously wealthy in the first place. As if the way of life we enjoy had nothing to do with the money the government spent. But after giving them their first round of tax cuts in 2001 (we were running a surplus at the time – which helps pay down the debt – and they felt “people ought to be able to keep more of their own money,” so they gave the wealthiest among us a tax cut that saved many of them more money in taxes than most of us make in a year, as if they really needed it), they started two wars in the Middle East. One of those wars did not require the full force of our military, and the other did not require our military at all as it was based on total lies. Then the Republican-controlled Congress, in their infinite “wisdom” (as in “we’s dumb”), did what no country in the history of Civilization has done. They cut taxes in a time of war. In other words, they started two wars and refused to pay for them.
This ran up our huge debt, of course, but the Republicans lied to the country and told us it wasn’t adding to the deficit. That’s because they were defining the deficit as only pertaining to the actual budget passed and not as the difference between the total amount of money the government took in versus how much it spent. They funded the wars through Emergency Supplemental bills, which is money not counted as part of the budget. The concept was intended to be used for unforeseen spending. The Republicans never intended for either war to ever end, so there was no excuse for calling them “emergency spending.” Yet this is how they were able to tell voters that the deficit wasn’t so bad and deflect their attention away from the ever-expanding debt. When Barack Obama came into office he put the wars on the budget, so they weren’t being funded by emergency supplemental bills that weren’t being paid for with tax revenues, and the Republicans immediately started talking about how much Obama had increased the deficit. You gotta admit, that takes balls.
The vast majority of the political hand-wringing seems centered on the tax cuts for the bottom 98% of income earners, the folks making less than about $250,000 per year. [For the record, I live in New York State, one of the most heavily taxed states in the country. The cost of living can be high here, especially in parts of New York City, but outside of there, $250,000 per year is pretty damn good. The only way those folks would be struggling is if they were trying to live beyond their actual means. It's possible to live quite happily on that income.] The Congress can rectify that very easily. In fact, they should since it’s quite possible that close to 100% of the House Republicans want the “lower 98″ to have their tax rates extended into the new year. A bill to do that has already passed in the Senate. [Yes, a bill for raising revenue must "originate in the House." But since they're amending the Tax Act of 1986, they are amending a bill that originated in the House. It just originated there almost three decade ago.] But Speaker John Boehner refuses to bring the bill to the floor for a vote. Why not? If you say you want the Bush Tax Cuts to continue but you won’t guarantee that they continue for the folks who aren’t in the top 2% of income earners, it’s pretty hard to say you aren’t trying to make sure the top 2% get their tax cuts extended, too. You can pass them for the rest of us and have a real public debate about whether or not the top 2% get to keep their tax cuts. But they don’t want to do that because the public knows that every one of their arguments in favor of doing so are bullshit. The rich are not “job creators,” and everybody with an IQ in the three-digit range knows that. But even Rick Santorum admitted they would never get the support of the smart people, and the people he said that to liked it.
But all is not lost. Famous rich people like Warren Buffett have said they want their taxes to be increased. They understand that in order to have the great country we have, you need to have a government that can sustain it. And that means paying for things like infrastructure, public schools, and police protection. Goods move to market on well-maintained roads. Businesses benefit from a well-educated work force. And people feel safer when they know there are police (and other emergency first responders) nearby to assist in an emergency. And many of us on the Left have said we’re willing to let our taxes go up if it will help the economy and the nation. So House Democratic Party Leader Nancy Pelosi has announced that if the Republicans don’t act by Tuesday, she will file a discharge petition. If 218 House members (and that number would have to include those Republicans we’re so sure want the Middle Class Tax Cuts to continue) sign the discharge petition, the bill automatically comes to the floor for a vote. And remember, there’s no such thing as a filibuster in the House. The Republicans can’t delay and stall the bill by threatening to filibuster it, the way they do in the Senate.
But is it really such a bad thing if the deal isn’t reached and the sequestration kicks in? Not if they work out a deal right away. You see, it’s not as though all of the spending cuts happen in the first few days or weeks. They could always suspend the rules and pass a bill without it going through all the committees and pass it in January when the 113th Congress convenes. The tax hikes on the lower and middle income earners would be temporary, and the hit on our wallets not so severe. They could even make it retroactive to the beginning of the year and we’d all get that money back. And remember, no Congress can ever tie the hands of a future Congress. They can always repeal or waive existing law and do whatever they want as long as the president signs it (and it doesn’t violate the Constitution, of course.) When the Democrats had the Congress, they instituted PAYGO (Pay As You GO.) All spending had to be paid for, except in extreme emergencies. The Republicans did away with that, usually by using emergency spending bills to authorize spending that often didn’t qualify as an “emergency.” That’s how we got two unnecessary wars and an unfunded Medicare Prescription Drug Bill pass. By the way, another way to save taxpayers hundreds of millions of dollars is to allow Medicare to negotiate for lower drug prices, the way the Veterans Administration does. Right now Medicare is prohibited from doing so. (Thank former Congressman Billy Tauzin for that one.) It would just be nice if the Republicans would publicly admit that they are primarily responsible for this nation being in such deep debt. Then we can begin to have an honest discussion about what to do about it. Otherwise, the Republicans will pretend their fiscal policies work and have nothing to do with the situation.
This is our open thread. Feel free to discuss the fiscal downshift or any other topic you wish. But relax. It’s not as dire as they make it out to be.