The Fiscal Cliff
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
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.
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.
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
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
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
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.
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.
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.
there’s more . . .
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 . . .
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.
stock markets, here and abroad, have been sniffing out this impending
fall from the cliff and have begun, I believe, a long slow grind
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.
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.
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.
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.
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.
Ross can be reached at: SanDiegoRoss@Yahoo.com
2012 by Robert Ross, all rights reserved