Market volatility, a plummet in disposable income and considerable job losses are some of the consequences that threaten to beset the American public, we are told, if Congress fails to stave off the fiscal calamity set to detonate on January 2, 2013.
The posturing by elected leadership on both sides of the political divide seems intractable and it appears there will be no avoiding it. But don’t worry, that is highly unlikely to happen. After all, given the colossal size of our government, what is a trillion here and a trillion there? Not surprisingly, proposals introduced by both sides thus far range from very disappointing to slightly less disappointing.
If Republicans are serious about the being the party of fiscal responsibility, it’s time to make a stand and put your money where your mouth is
That’s because both sides have offered up inadequate plans proposing only nominal reductions in the projected increases to government’s rate of growth - the president’s proposal being by far the more laughable of the two opening round proposals. While Obama has clearly signaled he’s comfortable foregoing any pretenses he is actually interested in fulfilling any promises to reduce spending, the Republicans have been increasingly gesturing they may give up altogether on the fight to hold the line on increasing tax rates.
In either case, by refusing to recognize that the real fiscal cliff is our sky-high national debt and the pending entitlement crisis, the real losers are future generations of Americans who will be forced to endure a fiscal reckoning in just a few short years.
It’s not about bad guys versus good guys, mind you, it’s much more tragic than that. It’s about an absence of bold leadership. Sadly, the negotiations under way have despairingly become yet another contrivance to distract the American electorate with heated rhetoric and high-minded “sloganeering” meant to show the members of one party care more for the middle class than those of the other party.
The thing is, even though both sides may feel equally convicted to do what is right on behalf of the American taxpayer, neither is fully acting without political self-interest here. Both sides know entitlement programs and tax law need massive reform to assure sustainability, but have failed once and again to advance specific legislation detailing exactly what those reforms should be.
That’s because both sides, ultimately, are reminded incessantly by interest groups and high paid consultants to say yes to more and more spending if they desire re-election. Millions of individual Americans demanding government cure every social ill under the sun have been just as complicit. It is, regrettably, the obscene norm of our electoral system.
In their zeal to appease the varied interests groups responsible for financing their successful election victories, both sides have yet to propose real reforms, real spending cuts and real solutions that will put us back on track towards fiscal and entitlement sustainability.
In his interview with Bloomberg TV, President Barack Obama said, “We're going to have to see the rates on the top two percent go up and we're not going to be able to get a deal without it." While Speaker of the House John Boehner, indicated that we have got to cut spending, and that “it is appropriate to put revenues on the table.”
Both President Obama and House Speaker Boehner have put forward economic packages that are considered starting points in negotiations, but does anyone remember past discussions of four dollars in spending cuts to every dollar in tax revenues? Well, the president's stated proposal calls for $1.6 trillion in new tax revenue and a measly $600 billion in spending cuts to the growth of government. That is a dollar in spending cuts and four dollars in tax revenues.
If you listen, both sides are presuming fiscal responsibility, but they are still only talking about reducing the rate of government spending. It’s not nearly enough, and it’s irresponsible. Real leadership requires one to accept responsibility and make the tough decisions, but neither side is tackling the root cause of what’s been driving our economy to the brink: runaway government spending, and the unsustainability of Medicare, Medicaid and Social Security. The reality is that each one of these programs is going bankrupt if we do nothing.
We already know this Administration will not do it, but the refusal of Congress to propose real cuts in spending and make current tax rates permanent has been generating troublesome uncertainty in the markets and in the investment community for some time now. I predict continued stalling will also begin to dramatically impact hiring and entrepreneurial decisions, and credit agencies to weigh in with real threats of further downgrading.
That’s because real sustainable jobs come from Americans who have ideas and are willing to risk capital and work hard in order to bring those ideas to market. The problem with raising taxes on the “rich” is that half of them are small business owners. The best thing we can do to encourage these entrepreneurs is to lower taxes, reduce regulations and stop creating uncertainty in the free market system.
History has shown that governments who make real cuts in spending achieve a quicker economic recovery, but every indication thus far points to the inevitability of Americans facing increases in tax revenues and a continuation of failed big government policies that have only served to increase the national debt by 50 percent since Obama took office in 2009.
The awful truth is this “culture of spending” in Washington has rendered us no longer able to pay our bills, balance spending with current revenues, or service our existing debt without borrowing and printing more and more money. The unavoidable effect of this has been an increasingly perilous devaluation of our money - the consequences of which we will not be able to undo for a long time to come. Americans will then know what scarcity truly feels like.
Until the president and Congress solve the fiscal problems of this country by reining in runaway spending, seriously address the massive debt we have incurred, and the Federal Reserve turns off the printing machines, we are all acting dishonestly and self-indulgent by continuing to steal from future generations.
The worst is yet to come.
Even if both sides settle on negotiations to avoid this fiscal cliff prior to deadline – there is another path that we must address that will eventually put us over the edge; a debt that has grown 82 percent in comparison to a feeble economy that has only grown by 16 percent.
The numbers don’t lie. Consider $20.5 trillion in Social Security and $42.8 trillion in Medicare liabilities and you begin to realize the fiscal cliff is just the beginning of our problems.
When will enough be enough?
Mexican Revolutionary leader Emiliano Zapata is famous for having said, “I would rather die standing than live on my knees.”
Similarly, I suggest if Republicans are serious about the being the party of fiscal responsibility, it’s time to make a stand and put your money where your mouth is. If they are convinced they will lose the battle against a “tax and spend” president, then why not lose big and at least offer up bold reforms and real cuts in government budget instead of bowing out?
After all, lest you forget, Americans elected you to lead in Congress precisely because of your promise to take a stand against fiscal wastefulness.