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Awareness Magazine
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REFLEXIONS

on The Fiscal Cliff


By Robert Ross


It is incumbent on every generation to pay its own debts as it goes. A principle which if acted on would save one-half the wars of the world.” — Thomas Jefferson


They call it the “fiscal cliff,” and we’re due to step off January 1, 2013. In the Road Runner cartoon series, Wile E. Coyote races off the cliff and continues running until . . . until he looks down — noticing he’s no longer on solid ground. He, of course, ends up falling hundreds of yards at breakneck speed until splattering on the pavement below. Metaphorically speaking, the nation appears to be on that same course. And when the nation finally gets around to looking down...it’s going to be quite a fall.

The phrase fiscal cliff was coined to describe a collection of tax and financial provisions that will expire or come due on January 1, 2013.  For starters, the Bush tax cuts will expire, as will estate, and gift-tax provisions. The 2 percent cut in social security payroll taxes will expire. Some unemployment benefits that were extended to the end of 2012 will also expire.

And, as part of a deal made last summer to raise the debt ceiling, there will be automatic budget cuts of 109 billion in defense and social programs. There will also be an additional 83 billion in cuts from a compilation of reductions and changes due to take effect January 1. In total, these changes and expirations add up to approximately 607 billion.

Six hundred billion? In today’s monetary lexicon — a lexicon that took shape after the 2008 market crash — hundreds of billions, even trillions of dollars — are amounts that have been bandied about so frequently that they’ve lost meaning and impact. A numbness has set in regarding excessively large sums of money.  

The bailouts for GM, Chrysler, the banks, TARP programs, and the “too big to fail” financial institutions amounted to more than a trillion dollars. The numbers were so staggering that — with the threat of financial collapse — our legislators quickly agreed to increase the debt, rather than examine the consequences. And, life went on. America focused on the usual distractions . . . American Idol, one’s favorite sports team, or perhaps Survivor. Unsustainable debts? Fiscal cliff? Don’t worry, it’ll all work out.

The attitude was and is: if a billion, trillion or zillion dollar debt doesn’t seem to matter anymore, why the fuss? Let’s continue the good times. Life’s too short to worry about a silly thing like an unsustainable debt.

This year will be a bit different though. The Congressional Budget Office says that because of this upcoming “cliff,” a recession in 2013 is almost certain. Parts of Europe are already in recession.

In November, the nation goes to the polls to elect a president. With Congress sitting on its hands refusing to do anything until after the election, we have a recipe for gridlock, stagnation and indecision.

And there’s more . . .

The Supreme Court will be rendering a decision on the Obama healthcare plan in early summer. If the healthcare bill is deemed unconstitutional, one can expect bitterness and recriminations coming from both sides of the Congressional aisle. As though the nation wasn’t already polarized enoughAnd there’s more . . .

We will more than likely need to raise the debt ceiling again shortly after the November election. Currently the National debt is approximately 16 trillion dollars. Last year a bipartisan committee (dubbed the super-committee) met for weeks attempting to hammer out a deal. The result was no deal — a downgrade in the U.S. credit rating — and a cliff facing us January 1, 2013. This year’s “bipartisan” debate over budget cutting — to allow for a rise in the debt ceiling — will be a replay of last year’s inability to come to terms with the debt.

The stock markets, here and abroad, have been sniffing out this impending fall from the cliff and have begun, I believe, a long slow grind downward.

So this begs the question, what to do? Occupy Wall Street? Occupy main street?  Write one’s Congress person? Letters to the editor? Vote for a new group of inept legislators to replace the current group?  Or, just turn on the T.V. . . . after all, things are going to play out the way they play out.

For me, as an observer, I’ll watch this mess develop, intrigued, yet feeling detached. I suspect it’ll be a number of years of attempted budget cuts and a number of years of attempted economic stimulation. Essentially, kicking the can down the road, hoping the problem resolves itself. But it won’t. It’ll take a crisis to wake us from our slumber. In the meantime, I hope to view as many sunsets, beautiful seashores, and majestic mountain meadows as possible. Life is short, very short.

Thomas Jefferson’s quote about wars and debt was dead-on. If, before a war (or any expensive endeavor), we had to vote on it and its cost, and agree to pay for it up front (through taxes), there would be few wars (and few wasteful bailouts) indeed.

The unfortunate thing about Jefferson was, like Americans today, he had grown accustomed to his lavish lifestyle and mansion at Monticello. Refusing to live within his means, he died so heavily in debt, that his son had to sell Monticello.

Perhaps we should take a lesson from Mr. Jefferson . . . live within our means, use debt very sparingly, and if one happens to step off a cliff?  Well . . . just don’t look down.

Robert Ross can be reached at:  SanDiegoRoss@Yahoo.com

Copyright  2012 by Robert Ross, all rights reserved