What Is The Fiscal Cliff?
IT’S NOT WHAT D.C. IS TELLING YOU IT IS, THAT’S FOR SURE
America is careening headlong toward a fiscal cliff … and to listen to the mainstream media tell it, a big part of that “cliff” involves government slowing down its unsustainable expenditures.
Wait … what?
How on earth is slowing the growth of government in any way synonymous with going over a cliff? Wouldn’t that be applying the brakes instead? Of course … but in Washington, D.C. (and in Mitt Romney’s world), government is an instrument of job creation, which means that government cuts inhibit job growth.
First of all, let’s not forget that the spending component of the cliff – which the press claims would result in “devastating” cuts of 8-10 percent in the coming fiscal year – was agreed to last summer as part of the “debt dereliction deal” that added $2.4 trillion to the nation’s debt limit. Here’s our question: If these coming cuts are so devastating to the economy, then why the fuck didn’t spending $2.4 trillion in money we don’t have over less than two years’ time do anything to stimulate the economy?
Answer: Because government is not an instrument of job creation – or at least not a very good one.
The other component of the “fiscal cliff” is the expiration of the 2001/03 tax cuts on December 31 – which unless Congress acts in the interim would result in a massive tax hike on the American people in 2013 that would further depress our re-stagnating economy.
Can our country afford that?
We think not … and while the so-called “Bush tax cuts” have not been a recipe for sustained economic growth (at least not when coupled with trillions of dollars in new deficit spending), you better believe that doing away with them would be a recipe for economic contraction.
Here’s the reality of the situation: The real fiscal cliff is a federal debt that has more doubled over the last seven years - and which is projected to grow to a whopping $25.4 trillion over the coming decade. Modest efforts to reduce this albatross on future generations should be welcomed – not demonized.