Our leadership in Washington is now contemplating how to ‘avoid’ the ‘fiscal cliff’ at the end of the year, when, if nothing is done, taxes will rise some $2000 on the average American household, and the Federal government will face actual budget cuts.
Awwww… poor babies.
It’s true that nobody likes paying taxes, and even fewer enjoy a tax increase. And the tax increase that will bite most Americans is the end of the ‘temporary’ cut in the Social Security payroll tax, which will itself cost the median American household about$1000.
But the intent of that tax cut was to stimulate the economy through consumer spending. It didn’t work. When I try to do something, and it doesn’t work, I stop doing it. But I guess that the ‘temporarily’ lowered Social Security tax rate has become yet another entitlement.
The other part of the ‘fiscal cliff’ is a reduction of some 10% of discretionary spending. Other than an adjustment to Medicare reimbursements, entitlements aren’t touched. Again, nobody likes budget cuts, but I can’t believe that the Federal government will roll over and die because of a 10% cut.
Yes, we need to raise taxes on the rich. The economy, as it has functioned for at least the last ten years, has worked to transfer money from everyone else to the very richest. If we continue at this rate, we will have regressed to a feudal state in another generation. It’s reasonable, in this context, for the government to redistribute to maintain balance. But do not believe, for a moment, that raising taxes on the rich will solve all our problems, or provide license for yet more government spending. We’re still very badly out of balance.
President Obama, for his part, is doubling down on the crisis, asking Congress to delegate to him the power to raise the debt ceiling, and allocate more stimulus spending. No, that won’t work either. We still have a Constitutional government of checks and balances. We worried about an overreaching executive under President Bush, and are now learning that Democrats can do it too.
Will doing nothing and ‘going over the fiscal cliff’ be pleasant? No. But I can’t see how it will be any worse than the power grabs and kick-the-can-down-the-road schemes in play now. The job fairies are will not shower their employment pixie dust on us if we extend the Bush tax cuts for two more years. This is because there are no job fairies.
Until our leadership comes up with a real plan to bring revenues and spending back into balance, the fiscal cliff seems the least painful alternative in the long run, as it at least represents an effort to balance revenues and spending.