Fiscal Cliff

The Wall Street Journal has an article yesterday about how Congress and the White House are now turning toward dealing with the “fiscal cliff,” that is, the “year-end spending cuts and tax increases that threaten to push the U.S. back into recession.” You can’t read the whole article unless you are registered, but that’s okay, because the WSJ never says anything worth reading anyway. I just used them to broach the subject.

The teaser goes on the say that, ”Whether this represents a temporary truce, or a step toward a pact to trim the deficit, won't be known for weeks.” Since the “fiscal cliff” was purportedly created for the express purpose of “trimming the deficit” with its tax increases and spending cuts, I’m not sure what point the writer was trying to make with that little gem.

There are several things that are actually rather amusing about this situation, putting aside the sad fact that it is likely to wreck our economy. Reality is that the measures that Congress takes to resolve it are also going to wreck our economy, so there’s no point in getting too wound up about it. Our economy long since passed the point where it could be restored. We’ll keep it going for a while yet with bandaids, but…

The people in office who are frantically trying to deal with this problem are, of course, the same people who created it to begin with. They kicked the can past the election, apparently hoping that they would not get reelected and that someone else would have to deal with it, and then they spent an inordinate amount of money, time, money, energy and money getting reelected so that now they do have to deal with it and they consider than an “unforeseen circumstance.”

Then there is Obama still blaming Republicans for wrecking the economy with their reckless and irresponsible tax cuts and at the same time demanding that not only should two-thirds of those “Bush tax cuts” be extended, but so should the tax cuts that he piled on top of them. We need to continue $2.2 trillion of the “Bush tax cuts” and $1.2 trillion of his tax cuts so that he can reduce the deficit and pay off our debt.

Republicans say that tax cuts will boost the economy, while Democrats do not make that claim. Democrats say that tax cuts will restore the economy, which Republicans ruined by making tax cuts. They also say that eliminating the existing Republican tax cuts will crash the economy. Actually, no Democrats before this one have said anything like that, and they mostly raised taxes rather than cut them, but modern Democratic economic theory has become all but indistinguishable from Republican's.

Obama has made a fetish out of not extending the “Bush tax cuts” for the “one percent” and has been equally adamant about not allowing them to expire for anyone else, so the discussion on the “Bush tax cuts” is apparently going to continue for a full eight years after he is out of office and we are seemingly never going to hear the term “Obama tax policy” uttered in his second term any more than we did in his first. Democrats don’t do budgets and they don’t do tax policies. They do do tax cuts.

Not to mention that shortly after the “fiscal cliff” is dealt with we will hit the spending cap again.