Fiscal Cliff

Just pulled out of ElectionVille.  Next stop is FiscalCliffe.   Some of us ride in plush seats, some in coach, others stand in the aisles or ride on the roof, but we are all on the train. In the front car are the really plush seats where the President and Congress sit.   They occupy the front car because they are supposed to be looking out for what comes ahead but they spend most of their time arguing with each other. 

“We need to hook up some more cars so that those people riding on the roof can sit in safety,” the President says. 

“We won’t have enough coal for the engines to pull that many cars,” Republicans say.

“We need have those who are sitting in the plush seats pay more,” the President insists.

“They are already paying way more than their fair share,” Republicans counter.

“The passengers on the train have spoken.  They want the plush seats to pay more,” the President responds.

“They kept us in power in the House because the House controls the money.  They trust us to manage the money and we can not betray that trust.  If we make the plush seats pay more, then the plush seats won’t need as many porters and we will lose jobs,” the Republicans parry.

“I am not going to make the other passengers pay more when the plush seats can easily afford a little more,” the President maintains.

In September, I wrote about the coming “fiscal cliff”, a self-imposed austerity program of spending cuts and tax increases that is due to take effect Jan. 1, 2013, unless the President and Congress can agree to some fiscal balancing program.  After all the election talk and negative campaigns now comes the fiscal cliff chatter, which I am now adding to.

We are about $250 billion away from the debt limit of over $16 trillion dollars.  The Treasury will run out of money by the end of this year.  With some financial sleight-of-hand, the Treasury expects that they can make it till February of next year before the debt limit must be raised.  In July and August of 2011, President Obama and the Republican House could not come to an agreement to raise the debt limit and avoid default.  The fiscal cliff of upcoming spending cuts and tax increases became the devil’s bargain that were agreed to in the compromise that led to the raising of the debt limit to its current level.  The President did not want to come back to Congress for more money until after the election.  After the momentum of the 2010 elections, Republicans thought the election just past might give them control of the Senate and the Presidency.  The grand bargain was set to take effect after the 2012 election, each party thinking that the voters would make a clear choice in the elections.  Instead, the voters chose a divided government with the same power balance as before the election.  In short, voters said “Work it out.”

“Grandpa, what’s the pistol cliff?”

I snort a quick laugh and the inner comic in me speaks up.  “It’s a place where we are all going to shoot ourselves in the foot with pistols.”

“Will somebody shoot my foot?” 

I’ve really stuck my foot in it this time.  “No, your feet will be fine.”

“Will mommy be able to walk after her foot gets shot?”

“Your mom is not going to get her foot shot.  No one is going to get shot.  I was just making a joke.”

“I was on a cliff over the ocean this summer and there were big rocks at the bottom on the beach and the water was going ‘whooompf’ all over the rocks.”

“I’ll bet that was pretty,” I say.

“Cliffs won’t hurt us as long as we stay on the path and don’t climb over the rail.”

Amen, I think.

In the early nineties, the Democrats made a deficit cutting bargain with the first President Bush:  in exchange for tax increases, the Democrats would agree to spending cuts – after the recovery from the recession.  The tax increases were put into law and cost President Bush a second term.  The spending cuts that the Democrats promised never came.  In 1994, the Republicans took the House and forced the issue.  The symbol of the Republican Party is an elephant – and elephants don’t forget.  The President and Democratic Senate Majority Leader, Harry Reid, will be in budget negotiations with John Boehner, the Republican House Majority Leader, who was in the House in the early nineties.  Also present will be Mitch McConnell, the Senate Minority Leader, who was in the Senate at that time.  It is doubtful that either of these two Republicans have forgotten.    

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