Sunday, December 23, 2012

Over the Cliff

The chances for avoiding the "Fiscal Cliff" are not looking good at the moment. Obama is chillin' on a warm beach in Hawaii, and congress has closed shop for the holidays.

I am amazed and irritated that a deal couldn't be done. I really thought a deal would emerge after everyone had their turn at calling names and laying blame. A last-minute scaled-down compromise could still happen, but even so, it would likely amount to punting the tough decisions once again.

The bulk of the blame should be reserved for the Republicans. Even though the election was lost and their Raison d'ĂȘtre under question, enough anti-tax hysteria prevailed in the House to humiliate Boehner's negotiating efforts. It's hard to believe these folks would place the nation at risk for the sake of their passionate belief that the wealthy should be shielded from paying an additional dime in taxes, but there you have it.

Some blame could be handed to Obama as well, for he seemed determined to push Boehner to the wall and continually rub the election result in his face. It seems as though Democrats have concluded that it's best to leap over the cliff at this point as long as Republicans can be squarely blamed for it. A large chunk of mandated cuts would be from defense programs, which isn't all bad. Tax rates would simply return to where they had been prior to the Bush tax cuts, although in the absence of the annual AMT patch some middle-class families will be hit hard.

The short-term risks of going over the cliff are obvious: A stock market crash and renewed recession as working families shoulder a large tax increase. What most don't seem concerned with is that no one has yet proposed a comprehensive solution to the national debt problem. If Obama had proposed more serious restraints on spending in exchange for higher taxes on the rich, perhaps Boehner would have had a chance at selling it to his colleagues. The irony is that by doing nothing, rates rise for everyone, and it's difficult to see how Republicans gain from that.

Whatever happens by years end, the next congress will likely continue the debate. The concern is that partisan divisions are so deep as to preclude the type of compromise we used to take for granted. So what if Obama wins points in public opinion and further vilifies Republicans; the next election is two years away and much damage could result in the near-term. If the rift becomes too wide, it erodes the ability to govern, and no one wins in that outcome.

Another example can be found in the debate over gun control in the wake of the latest school shootings. The emotional ground-swell of opinion in favor of more restrictions on guns collides with an equally emotional (and more irrational) viewpoint that claims Obama wants to disarm everyone. There are in fact some bizarre and disturbing aspects to the Sandy Hook tragedy, which will take a future blog to discuss. While it seems possible that the PTB somehow conspire to promote such shootings in order to sway public opinion, any benefit to public safety from increased gun control would be offset by deeper cracks, divisions and widespread cynicism among those opposed. The latter is my primary concern, and the present meme of revolution and national disintegration will need to be watched.


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