By: Jeffrey Klein
Political Buzz Examiner
The well respected, bi-partisan Congressional Budget Office is sounding the Def Con 5 alarm to all who will listen, declaring that the United States will “fall off a fiscal cliff” on January 1, 2013, which would contract the economy by 1.3 percent over the first two quarters and plunge the country back into a recession, according to a May 22, 2012 Associated Press article.
Although we have seen this movie before, this sequel has been titled “Taxmaggedon.”
Last August Washington, D.C. was in political gridlock over raising the national debt-ceiling, from $14 Trillion to $16.2 Trillion, illustrating just how dysfunctional and intractable our “divided government” has become. However, in exchange for just over $900 billion in spending cuts over 10 years, Republicans agreed to immediately raise the debt limit by an even trillion dollars.
Then, they agreed to an additional $1.2 trillion automatic rise in January 2012, for an additional $1.2 trillion in spending cuts over 10 years, which was to be decided by an equally-divided, so-called “Super Committee” over three months of deliberations.
As expected, the Super Committee failed, triggering across the board cuts of $600 billion over ten years from the already bloated entitlements–this is good.
A matching $600 billion is to be slashed from the Department of Defense budget over ten years, but in addition to the $487 billion in cuts over 10 years that President Obama had already ordered and received just last month from new Pentagon Chief Leon Panetta–not Kosher.
This type of installment loan strikes Conservatives much like the offer regularly espoused by “Wimpy,” the Popeye cartoon character … “I’ll gladly pay you Tuesday for a hamburger today.”
Even the Urban Dictionary fairly illustrates the fallacy of this deal by saying … “He [Wimpy] was a glutton, and would consume burgers at a ferocious rate–but could rarely pay for his habit.
There is not a more fair and accurate description of how the U.S. government has operating–out of control.
In addition to these spending cuts, American taxpayers will also get tapped for an additional $310 billion in taxes, due to the expiration of the so-called Bush Tax Cuts and the so-called “payroll tax holiday,” beginning in January 2013, according to Sunlen Miller’s ABC News OTUS article earlier this week.
However, as there has been no change in flexibility between the opposing fiscal ideologies of the Republicans and Democrats, especially with the fall elections looming, our [still] divided-government is still in gridlock.
In this corner you have Senate Republicans–because the House is Republican-controlled and not a political or tactical issue–41 of whom sent a letter to Senate Majority Leader Harry Reid (D-NV) demanding that these issues be addressed immediately.
“Instead of addressing this fiscal cliff, President Obama and Congress have spent much of the past year advancing misguided redistributionist policies in the name of fairness. It is essential that Congress and the president address these coming tax increases this summer [rather] than creating additional uncertainty for families and job creators, by waiting until the last possible minute.”
And in the opposite corner, you have President Barack Obama and Senate Democrats who say they refuse to act on the expiring tax cuts and automatic spending cuts unless Republicans show greater flexibility on raising tax rates on the wealthy.
Senate Majority Leader Harry Reid (D-NV) released a statement in answer to the letter:
“Once Republicans are willing to abandon their commitment to more tax breaks for multi-millionaires and special interests and their plans to end Medicare, I am confident that we can reach an agreement,” Reid wrote. “Unfortunately, it appears that Republicans blind adherence to Tea Party extremism is making it impossible to reach this sort of balanced agreement before the election.”
“The American people want a balanced approach to fiscal policy that combines smart spending cuts with revenue measures that ask millionaires and big corporations to pay their fair share,” Reid said in his own letter.
The critical and inescapable difference between the two parties is their perception, or willingness to deal with the core problem, and the solutions that they propose–and what past and recent history has proven to work, and not work.
Republicans steadfastly believe, as does the International Monetary Fund (IMF), that we have a spending problem–not a revenue problem, and that we no longer “kick the can down the road” for any reason–as the road has come to an abrupt end.
As such, we must implement immediate and drastic entitlement reform, serious budget cuts to eliminate operating deficits to retire the national debt, and tax reform that includes eliminating most loop-holes and reduced tax rates, if not a “flat tax” for corporations and individuals, to make the U.S. more competitive in attracting new, job creating foreign investments, and put disposable income back into the hands of the people, to release the “pent up spending demand,” all in order to “jump start” the economy and rapidly create jobs.
In addition, we must have an energy policy that immediately makes available all of our oil and gas resources for recovery to reduce the cost of energy and eliminate our reliance on foreign oil, which will cut the cost of virtually everything, particularly electricity, heating and most importantly–food.
In stark contrast, Democrats feel that we don’t have a spending or entitlement problem, because since President Obama took office in January 2009, they have done nothing but stonewall and reject even the presidents own Simpson-Bowles Committee recommendations.
In fact, Democrats believe that we should borrow another trillion dollars to fund another round of Obama stimulus–even though the first round created nothing but the record for longest period of sustained high unemployment in history–39 months.
And, they feel it is prudent and necessary to raise taxes on the most successful and wealthy Americans–the “millionaires and billionaires”–by passing the so-called “Buffet Rule” that President Obama has been barking about all over the country, which would double there capital gains tax rate–but only raise about $5.3 billion in additional tax revenue per year–against an expected $1.3 trillion dollar budget deficit.
And then there is the roundly rejected “Obamacare,” the largest entitlement program in U.S. history–whose fate now lies in the hands of the U.S. Supreme Court, which is expected to render its opinion in June.
Not surprisingly, it seems clear that our situation has gotten to the point where the only cure for Taxmaggedon will be the November 2012 elections–God help us all.