On the fiscal cliff: What is wrong with paying our bills and paying as we go?

Blogger’s Note: After posting this I realized that I had not mentioned the part of the “fiscal cliff” situation in which if the president and congress fail to come to an agreement by the new year that a combination of automatic spending cuts and an expiration of tax cuts will take effect and many think that would send the economy over the fiscal cliff, as it were. Since partisans in congress don’t want to compromise for fear of looking politically weak and losing votes from what they consider their base, they passed a law that enacts these automatic cuts with the idea they could escape blame — sounds crazy I know.  As you will recall they were pressured to do something because of a lowered credit rating based on the mounting national debt and the continuance of deficit spending (spending more than is taken in via taxes). Ironically, the credit ratings are issued by the same agencies that failed to warn of the Wall Street shenanigans that led to the Great Recession that began in 2008.

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Do any of us really understand what this “fiscal cliff” thing is all about? Or has the piper finally come to get his due?

The nation, both as individuals and as a whole, has been living off of the credit card for so long that it’s as if no one really understands what it means to pay as you go.

(In the county where I live, I think it was back in the ’50s, a new court house was built and paid for cash. When they went to build a new annex some years ago, that was unthinkable).

Now the whole nation is over leveraged, as it were, and may not be able to get its hands on more borrowed money — I guess that is what it is all about.

Hard core adherents to ideology, on the right and on the left, or partisans, are using the threat of going over the fiscal cliff in a game of chicken.

(So many abhor “big government”, but if the big government quits doling out money dire consequences are predicted.)

I would say that if our leaders cannot simply conclude that we have to pay our bills and collect the necessary revenue to do so and not take on more than we can afford (and that is of course the sticking point, figuring out what we can afford — or what we have to have), then we need new leaders (I know, we just had an election) — I mean if they can’t figure that out (and they have to use their own judgment, not just what flies with the constituents) then impeachment might be in order, although I don’t think lack of judgment is a legal grounds for impeachment. But if they had any shame they would just resign.

I guess I am center left in politics. But even I, who would be more likely to support social programs, would not think that we can afford to provide services without revenue. Opting to borrow money from China and other sources so we can print more money to hand to the banks essentially free so they can in turn loan the money out for interest is leading us into fiscal catastrophe. I know, some of you who are more versed in economics and money will say I do not know what I am talking about — but be honest, that is essentially the situation.

Another fantasy is budgeting the pay back of things by forecasting more revenue in the future. The revenue does not usually materialize and meanwhile more debt is added on.

Simply taxing the rich does not solve the problem. But we do need to tax the rich and we need to take away a lot of the deductions. But we need to adjust our tax system across the board, as well.

Both President Obama and the Republican leadership need to get together and quit playing politics.

That said, I do think that the president does have the upper hand in this one. I mean elections have consequences. But you can overplay your hand too.

The way it was put in the right-wing radio show I was listening to the other day is that the Republicans are being blackmailed into accepting liberal demands for an agreement lest they be accused and take the blame for letting us all fall over the fiscal cliff. But they could hang tough and then when things get worse they can see, we told you.

Man, are we ever in need of sensible centrists.

P.s.

One woman who identified herself as a small business owner (and if I wanted to be snarky I would say probably small minded too) said that we should cut off extended unemployment benefits (and actually that is being done) so people will not just sit there and turn down jobs such as working for McDonalds). Low-pay employers prefer a captive labor market. I mean there is some truth and sense to what she said, but it is a vicious cycle. Too many low-pay jobs and the government ends up paying out money to subsidize them in the form of food stamps and in other ways. Then again, I have often thought that if most everyone worked for low pay and there were not government programs prices would come down. They did in the Great Depression — well I see, that is no solution either.

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