The self-inflicted drama of the “fiscal cliff” is playing out in Washington like a Greek comedy --- or tragedy, depending on how much you know about economics.
In preparation for appearing on CNN, I read the Congressional Budget Office reports, which are like Ambien in ledger form. To sum up: We have made promises and increased spending to a level that we cannot sustain, and this must be addressed. Aside from more than $16 trillion in debt, now 100% of our GDP, it is estimated that with Medicare and Social Security we have $99 trillion in pending, unfunded obligations.
The ‘fiscal cliff’ is the expiration of the Bush tax cuts for 90% of Americans, resulting in more than $500 billion in new taxes. Most sane economists agree that this will spark another recession. On the bright side, just to kick the can past the election road, the sequestration agreement (for whatever that is worth in Washington) says they have to cut $109 billion in expenses. Half of the cuts must come from entitlements, worrying the dependency-addicted Democrats, and half from our Defense Department, which concerns the trigger-happy Republicans.
Complicating the matter, many in Obama’s “economic team” are leaving Washington soon. They want to spend more time taxing and regulating their families. Given what they have done with our economy during their reign, they might be arrested by Washington police for leaving the scene of a crime.
Considering what their policies have done and will do to our country, Japan now realizes it got off pretty easy being hit by just U.S. atomic bombs and not by our economic policy makers.
Most Americans expect politicians to work out a back-room deal to avoid embarrassing themselves again. The politicians feel these deals are too ugly for us to watch, so they are compelled to spare us the indignity of the “most transparent President” ever. Political deals are like sausage; it is best not to watch the product being made. The difference is, sausage as an end product is actually good.
In the Democratic vernacular, taxes have changed to “revenues.” Long ago they replaced the word "spending" with “investments,” especially when wasting money on Solyndra and the like. They think we are stupid.
When Clinton so famously “balanced the budget” with the Internet boom and all the taxes from those stock sales, the GOP and Newt Gingrich passed a budget (yes, Congress used to do that) of $1.7 trillion in expenditures. Adjusted for inflation, our federal government would be spending $2.3 trillion today and collecting $2.5 trillion in “revenues,” resulting in a $200 billion surplus. But instead of increasing government spending in line with normal inflation, under Bush and Obama we are spending $3.8 trillion today. Democrats, who believe we have a “revenue” instead of a “spending” problem, must also think they have a bartender, not a drinking, problem.
Those Republican neo-cons who have never seen a country they do not want to bomb because it looked at us wrong, have to give on defense. We spend $1.19 trillion a year on defense -- more than the other top ten countries combined and more than six times what second place China spends.
We have more generals than we had during World War II, and they have plenty of time on their hands to chase women. The sex triangle of Generals Petraeus and Allen might turn into a sex pentagon.
As General Eisenhower warned us about the “military industrial complex," it will grow and spend as long as you fund it. When you have a hammer, you are always looking for a nail, thus all these wars and conflicts overseas. Noble men and women serve in our military, so we always want to support the troops. But we have to rethink supporting demands of military generals whose power is based on their budgets and on making wars.
The D.C. spending precept remains: if you don’t spend all of your budget this year, it gets cut next year.
In short, the “fiscal cliff” will play out like most political events. Politicians will do what they do best: kick the can down the road. They will probably let us go off the “fiscal cliff” so they can magnanimously “save us” from what they created. It will be more like a fiscal bungee jump, with some mishmash of agreements that preserve their jobs and sweep government growth under the table.
A syndicated op-ed humorist, award winning author and TV/radio commentator, you can reach him at Ron@RonaldHart.com, Twitter @RonaldHart or visit RonaldHart.com