Cliff Hanger: The Fiscal Cliff Debacle & Where We Must Go From Here

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wile_e_coyote_gravity

As a little boy, I loved to watch the Looney Tunes. One of my favorite segments was the Roadrunner and Wile E. Coyote. There was an episode I recall when Wile E. Coyote chased the roadrunner to the edge of a cliff. While the roadrunner halted before falling to his demise, Wile E. was not so fortunate. I attribute this to two things: a) sound judgment on the part of the roadrunner and b) poor planning on the part of the coyote. If we look at the current fiscal cliff debate in Washington D.C. we can learn a lot from what I call the, “Coyote Conundrum.” This means poor planning and decision-making on the part of our leaders in Congress and the White House (mostly Congress). The million dollar question is: what must those who hold fiduciary responsibility for this nation do to avoid further financial deterioration in the coming days, months, and years?

The Fiscal Cliff for Dummies

The media and government are good for trying to scare the populace. They come up with terms like “fiscal cliff,” a terror alert color system, and other one-liners to scare the living daylights out of the average American. This is exactly what they did with the whole fiscal cliff debacle. This, the fiscal cliff, was simply a deadline to take effect at midnight on January 1, 2013 (not to downplay the seriousness of the issue). Congress passed something called the BCA or Budget Control Act of 2011 and at the aforementioned time, this was to go into effect. This meant people would see increases in taxes (of about 2-3%), many entitlement programs would lose funding and the government wouldn’t be able to pay its bills (which makes me chuckle considering we barely pay them without a fiscal cliff). So January 1, 2013 came and passed, but there was NO deal by the deadline. I guess someone from Great Britain or Canada should be coming to eulogize America now, right?

Well, that would be the case if this were an Armageddon like the media and some members of Congress would have you believe. I would not want you all to believe that I am in any way bastardizing the seriousness of this financial mess. However, we all have to laugh uncontrollably at how silly our leaders in Washington and those who give us the “news” can be at times.

fiscal-cliff-cartoon-cole

So the deadline of January 1, 2013 passed and Speaker John Boehner and President Obama still couldn’t agree on a compromise — mainly because Boehner’s mentally handicap step-children who wear the cap of Tea Party wouldn’t budge on anything. So after the negotiations faltered in the House of Representatives, the President set his eyes from whence he came: The United States Senate. The only problem is that he gave Senator Harry Reid (D-NV) too much influence. Reid became his typical partisan self and those talks faltered. Then in a swift act of valiant leadership, the President called in the bulldog, Joe Biden. The Vice President was able to work with Senator McConnell, the GOP minority leader, and hash out a “temporary” deal. It is not the deal that the White House wanted – and considering the mandate President Obama received in the 2012 election – it is not the deal that they should have to accept. For those of you who will argue that the GOP controls the House, let me inform you that even though Republicans have a seat majority, the Democrats still won the popular vote so that counts for something too.

After Biden and McConnell hashed out the differences, we got an extension of the Bush-tax cuts (yes, they’re still around) for all Americans who make $400,00 or less (450,000 for couples), an extension of unemployment benefits, and a two-month delay to spending cuts for the Defense Department and a few other government agencies. BUT, there is more. This deal only lasts two months and then the debt ceiling limit will be reached again, which will make it improbable for the government to fund anything, which could bring about a government shutdown come March 27th; so the newly elected 113th Congress must act swiftly.

Washington Needs To Act

For far too long, our leaders in Washington have simply pushed aside or placed bandages on the financial problems. The Bush tax cuts, the two unfunded wars, and the increased spending of the Obama administration have led to the quagmire in which we now find ourselves. However, America is not an exceptional nation simply because we say we are; we are exceptional because we do exceptional things. It is time for our leaders to do the exceptional things that have allowed our nation to grow to the power that it is today. First, we need to come up with a sensible plan to pay down the national debt, which will only get worse if we continue to ignore it. Second, we need to balance the budget so that we aren’t spending more than we have and so that we can restore real fiscal responsibility. Third, we need to make some tough choices on both defense and entitlements. People from both parties will not like either choice, but if this nation is to get its purse clean, then some areas will have to become the sacrificial lamb for the time being.

No one said that doing these things would be easy, but they must be done. President Kennedy once said of the challenges and tough choices that faced our nation, “We do these things not because they are easy, but because they are hard.” American ingenuity, the ability to compromise for the collective good, must surely trump any partisan bickering and ambitious pandering. People are depending on these men and women to act in the best interest of a nation. Now the major question is if they will succeed? The answer: they have no choice, but they need to succeed not only for our generation but for our posterity as a country, as well. It is so necessary for our leaders to step up and do their jobs. Although I have limited confidence, even a mustard seed of faith can go a long way.

Just some thoughts…

ADF

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  • DoomsBaby

    Good points and an excellent article!

    One thing people forget is that you don't need to actually get the debt to 0, our country just needs to shrink it. Almost every country runs a deficit(except Russia but no one trusts them), its not the size of the deficit, its how well you can pay it off that matters.

    Another thing to remember is that a Government shouldn't be compared to a family in regards to living in its means. I'm a pretty open-minded guy but that is one of the stupidest comparisons one can make. Mostly because the US Government has way more options when it comes to dealing with debt, including printing more currency, it can sell its debt(No one would be the Debt of a Family) and the fact that it is physical impossible to foreclose on a country.

    Finally, anyone who says the USA will end up Greece is just spouting talking points. Its is impossible for the USA to end up Greece for a variety of reasons.

    1. Any Country that issues Debt in its own Currency cannot be/ end up like Greece.
    2. Any Country with an Innovative and highly automated Economy cannot end up like Greece which had a Government run tourist and shipping based economy.
    3. The USA's debt is 70% owned by the USA, despite what people tell you, China barely owns a piece of the USA debt, less than 10%. 75% of Greece's wasn't held by Greece.

    For More Information, go to :http://grippingthenation.blogspot.com/

  • Uncle Hugh, BP

    "Third, we need to make some tough choices on both defense and entitlements."

    This is what both sides don't seem to understand. Social Security, Medicare/aid and Defense alone takes up about all we collect in taxes. Eliminate everything else, down to the lady who cleans the toilets at the Capitol, and we break even. And in a few years, we won't be able to do that.

    If they were serious, they'd go after the medical and pharmaceutical industries. They are bankrupting families, businesses and government by their ridiculous profit margins. Getting rid of their monopolies and cost shifting could almost balance the budget by itself. But they have too powerful of a lobby, too many government officials are making too much money off of them, and Republicans won't go after them because, "they're a business, and they give us jobs".

  • Peter Parker

    Good points.

  • http://twitter.com/sylquesaid @sylquesaid

    Partisan politics being what they are, the ideal of our elected officials acting in the best interests of the nation is in my opinion fantasy. The reality of endangering your reelection by compromising after taking the hardline is almost impossible. I am not saying the American public is stupid, lazy or ill-informed (though they may apply at times) but the business of living makes it difficult to understand the whys of a Representative's or Senator's vote. Self-preservation means towing the party line no matter what, because being seen as conciliatory is generally a weakness when reelection time comes around.

  • Laney

    Nice write up.

    It's pretty impossible for the US to pay off the interest on our loans let alone the principal of the debt itself. I'm the type of person who will say all of this is just a ripple effect of 1971; taking us off the gold standard. Printing money backed by nothing more than the "commitment" that taxpaying Americans will make good on the money is ludicrous (brilliant tho). eh. Federal Reserve is the boss. They make the rules and no one questions them. No one is going to find a solution anytime soon aside from higher inflation and higher interest rates.

    Henry Ford once said "It is well enough that people of the nation do not understand our banking and monetary system, for is they did, I believe there would be revolution by morning."

    Understatement.

  • http://glippost.wordpress.com Darrk Gable

    Dynamic explanation of the situation. I find it sadly humorous that the Dems and GOPers consistently blame each other for the state of the national economy when the reality is both parties have had a hand in getting us into the clusterf**k that is present.

  • NathanSC

    Looking at how people react to financial situation of the government has led me to several conclusions. My first conclusion is that most people want to cut only what doesnt effect them. So of course people who have alot of cash assets will be pushing fore cuts in programs that help the less fortunate. Then people who have an invsted interest in the military indsutrial complex dont want cuts even to programs that are a waste of money or better allocated elsewhere. Then there are companies who basically get over on the government and the people, with bags of money receive subsidies from the government in addition to their over all profit (e.g. oil companies).