Don Roach: Assessing Blame for the Latest Fiscal Crisis
Wednesday, November 28, 2012
If it’s Wednesday, we must be living through another fiscal crisis. Well the latest crisis du jour is the “fiscal cliff”. Sounds scary, right? I imagine throngs of Americans desperately trying to not fall off the side of an oceanside cliff while our politicians slowly push the masses closer and closer to the edge.
Haven’t we heard this all before though and shouldn’t the weeks after an election be filled with positive vibes instead of impending doom – Mayan prophecies notwithstanding? Still, have you read about some of the possibilities of this cliff?
Economic impact will be devastating
The infamous Bush tax cuts are set to expire on December 31, 2012. Some have labeled the resulting tax increase “Taxmaggedon”. The Congressional Budget Office (CBO) has estimated that come January if nothing happens, there will be a $221 billion increase in additional taxes, $95 billion increase in the payroll tax, $25 billion decrease in unemployment benefits, and a few other scary scenarios.
In addition to the tax increases, there are some automatic spending cuts that will be implemented in January as well. This will lead to a $1.2 trillion dollar reduction in the deficit. While that, in theory is great, the impact this has on the government’s ability to run will be devastating. The government will have a difficult, to say the least, time of adjusting to the reduced funds and may – no will need to borrow in order to meet its budget.
All of these will likely throw the economy back into a recession and all the “work” that the Obama administration has done the past four years would be for naught.
Part of me wants the country to move into a period of financial chaos just so that the economic policies of the last 4 years can be debunked. We’ve been hearing year after year about a financial crisis that the President and Congress must avoid through compromise. And every year, these two sides have finally gotten something figured out at the last second that didn’t result in the apocalypse.
I’m so tired of hearing about this, isn’t it time that we start holding our officials accountable? I mean if we’re looking to blame someone we should blame the President and Congress because each side wants to save their political faces above actually finding a solution.
Since it’s late November and we don’t fall off the cliff until January, we can expect December to be filled with a lot of public political posturing from both sides. Obama will be labeled this and Congress called that.
At the end of the day it’s their fault and I’d love to say that it’s up to us to make sure they compromise but we left that opportunity behind us when we reelected many of the same officials that have brought us to the cliff we’re staring down.
And so, it’s two weeks in a row that I have gloom and doom. But, if the world is still around January 1, 2013 rest assured that the latest “fiscal cliff” will have been averted through last minute wheeling and dealing.
Yawn, just another day in the land of the American economy.
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