November 26, 2012

“About that Fiscal Cliff”

John Stossel, Reason:

[…] I see the future: The politicians will meet and fret and hold press conferences and predict disaster. Then they’ll reach a deal.

It will just postpone the reckoning, but they’ll congratulate themselves, and the media will move on.

America, however, continues to go broke.

“They’re not going to admit that we’re bankrupt, and they won’t admit that we’re on the verge of a major, major change in our society,” says Rep. Ron Paul (R-Texas). “So they’ll keep putting it aside, but then we’ll eventually probably destroy the dollar.”

The across-the-board cut, or “sequestration,” was designed to be so distasteful that Congress would be moved to cut more deliberately. If it doesn’t act, $110 billion in projected spending will be automatically cut—half from domestic spending, half from the Pentagon.

“They assume that they made it so bad that they wouldn’t accept it, but I don’t think they did,” said Paul. “They’re not even…talking about real cuts. They’re talking about cuts in baseline budgeting.”

Right, the old baseline budgeting trick.

“If they propose, let’s say, a $10 billion increase for next year and cut it down to $9 billion, they say they’re cutting 10 percent. But they’re not cutting anything, they’re only increasing it $9 billion instead of $10 billion. It’s done on purpose so that people get confused.”

Republican House Speaker John Boehner calls the fiscal cliff a “nightmare.”

But why? Trillion-dollar deficits are more terrible.

Allow me to interject here:  Boehner is looking for ways to capitulate, because we have, as I noted earlier today and have noted for some time now, essentially a single-party system, with factions in that party warring over who controls the primary levers at any given time.  So of course Boehner will promote the left’s narrative, joining them in the messaging of a dire need to “compromise,” then accepting superficial concessions to justify the “surrender” (which to him is not a surrender at all; it’s just getting a deal done!),  just as he did when he capitulated on dept ceiling raises.  And the establishment GOP will support the moves — we’ve already heard from the several in the “conservative” punditry that fighting a tax increase “on the rich” is not a hill worth dying on (and none of them ever are, from opposing amnesty to defense of traditional marriage to actually standing for the pro-life position you put in your platform to woo the godbotherers) — while demonizing as unhelpful fringe Hobbits those who don’t recognize that we must act pragmatically here if we wish to save the country from such DIRE CIRCUMSTANCES as the NIGHTMARISH fiscal cliff.

Cuts of $110 billion would even be good for us because it would keep money in private hands, away from the bloated and freedom-killing bureaucracy.

“When government spending is about $3.8 trillion, you’re going to cut $100 billion? That’s a deck chair on the Titanic,” said Russ Roberts of the Hoover Institution. “If they’re actual cuts, I think that would be great. I’d cut 10, 20 percent across the board if I had my druthers. But across the board scares people because they think, ‘Let’s save the things that are really important and cut the things that are not so important.’ (But) that never works.”

It doesn’t work because every cent in the budget is absolutely crucial to someone.

Lately the media are focused on the $400 billion in tax increases that make up four-fifths of the fiscal cliff. We’re told that if the Bush-era tax rate cuts expire and the spending reductions kick in, catastrophe will follow.

“The tax increases sound scarier. But we have a trillion-dollar deficit!” Roberts pointed out. “So to me, the idea of raising taxes is probably a good idea. It says this spending that we’ve been doing is not a free lunch.”

I’m not convinced that giving politicians more money is ever a good idea.

And won’t the wealthy high-earners find a way around the higher rates? When rich people do that, much of their money goes to lawyers instead of consumer satisfaction.

Conservatives and libertarian recognize this.  And while they may differ on military spending cuts, they nonetheless agree on some conscious or unconscious level that what we’re watching here is yet more political theater — that of course the GOP leadership will capitulate, offering us the same rationales it always does before demonizing us for not understanding the realities of DC.

Marc Thiessen, WaPo:

With the “fiscal cliff” looming and no “grand bargain” in sight, talk in Washington has turned to a “down payment” — a package of spending cuts and revenue increases that would help us avoid the cliff and give leaders more time to strike a long-term deal. House Speaker John Boehner says such a mini-deal would serve as “a down payment on — and a catalyst for — major solutions, enacted in 2013, that begin to solve the problem.”

Unfortunately, the opposite is true. Passing a down payment now could very well doom the chances for major tax and spending reforms next year.


[…] what should Republicans do? Resist the call for a down payment, and insist on real tax reform as the price for any new revenue from limiting deductions. If both sides can’t agree on such reforms this year, they can do it next year. The Post reports this morning that “with tax rates set to rise automatically in January .?.?. Democrats say they have little incentive before then to cut a deal that falls short of their revenue goals. That means going over the cliff, at least for a short time, remains a possibility, they say.”

If Obama and the Democrats want to take us over the fiscal cliff, let them lead the way. Once the Bush tax cuts expire, every American will pay higher taxes — which means the pressure for tax reform on both sides will be even greater. By contrast, if Republicans give away the revenues from deductions and loopholes today, they will alleviate that pressure and have no revenues left to pay for a simpler, fairer, pro-growth tax code next year.

Message to the GOP: A down payment means the death of tax reform.

[my emphasis]

None of which matters.  Because John Boehner wants to be stroked by DC insiders and media leftists far more than he wants to engage in any fight that he believes will be used against him by those very same people whose good graces he so clearly covets.  Even if he’s holding the winning hand.

The narrative is being set for capitulation.  Just as it always is.

Prepare to be relegated even further to the fringe, Visigoths and “purists.”  Because you just don’t understand How DC Works.


Posted by Jeff G. @ 9:55am

Comments (33)

  1. All across the land a good portion of the 51% of those contacting their congressman are waffling around with, well, you know, I think we should pay for all this stuff with higher taxes cause else we’re going to go over the Fiscal Cliff™ and that would be bad. It said on teevee. And when are those new trains gonna run over to Oak and Broad and do you have the number for to get my Obamafone.

    Stone-ignorant mob democracy is to classical liberalism what representative government is to the Constitution.

  2. And otherwise PARTY OF NO!

  3. Let’s be like Hobbits and ride in our butter barrels over this ‘fiscal cliff’. If politicians are bemoaning it, it’ll likely be worse for them than for us.

    I’m calling my three. We must oppose these monsters.

  4. so does that mean that a loaf of bread is going to cost $50 in the not-so-distant future? for example.

  5. Just called my three, serr8d.

    They wondered what language I was speaking.

  6. so does that mean that a loaf of bread is going to cost $50 in the not-so-distant future? for example.

    Yes. Runaway inflation helps solve the “housing/mortgage/foreclosure crisis,” “student loan bubble” and the entitlements issues, and the only downside is that people who saved money (rather than, say, buying a house they couldn’t afford) get pilfered.

    And who wouldn’t want these perverse incentives shaping the future?

  7. I think a second dip recession is coming regardless of who does what. I think Obama and the Democrats want to “go over the cliff” and though they look like they’re playing chicken, aren’t in the sense that their object is actually to force the catastrophe that they’re publicly (most, anyway) saying that they want to avoid. They know that they will need a scapegoat to blame for the economy dipping back into a recession and that it will be much harder to sell blaming Bush – the only available villan is the House GOP. (That is to say that they can count on the media forgetting that the likes of Patty Murry are cheering on the coming catastrophe).

    I predict that no matter how much the House GOP caves, Obama and the Democrats will refuse their offers to force us off the fiscal cliff in order to blame the House GOP for the second recession. The only thing I can see is to have the House GOP abstain from the vote so that Obama has to own what is coming anyway.

  8. I predict that no matter how much the House GOP caves, Obama and the Democrats will refuse their offers to force us off the fiscal cliff in order to blame the House GOP for the second recession. The only thing I can see is to have the House GOP abstain from the vote so that Obama has to own what is coming anyway.

    Would our lord and savior, Barak Obama, to whom Jamie Foxx just gave thanks, would he really do that?

  9. We are headed for a catastrophic devaluation of the dollar. Usually that would mean more exports and an increase in economic activity. I don’t think that happens this time because the holders our devalued money won’t be able to pay to play. I’m thinking China adn Japan. Washington is intent on killing the goose. The only way you make a dent in $16 trillion of debt is to cap spending and get economic growth between 5%-10% for several years running. Who here thinks the next 4 years will bring economic growth? Right, the very policies of tax increases on the wealthy pretty much put an end to the hope of growth. See how France is doing with the 75% hit on the wealthy. They are leaving in droves per the WSJ. A tax increase will look good in 2013 but will destroy growth in 2014 and beyond. You can only tax what has been produced. You can’t tax future income. And the producers of that income will produce less, not more in response to higher taxes. Should have learned that axiom from the Soviet farms in the ’50s. Idiots! Equality of outcome rules now. We are done with the economic freedom that created the wealthiest middle class in history.

  10. With the “fiscal cliff” looming and no “grand bargain” in sight, talk in Washington has turned to a “down payment” — a package of spending cuts and revenue increases that would help us avoid the cliff and give leaders more time to strike a long-term deal.

    That’s what we need, more time. To keep doing the same goddamn thing.

  11. Up is down, black is white, Russia is…land of the free?

    The Communists have won in America with Obama but failed miserably in Russia with Zyuganov who only received 17% of the vote. Vladimir Putin was re-elected as President keeping the NWO order out of Russia while America continues to repeat the Soviet mistake. […]

    Recently, Obama has been re-elected for a 2nd term by an illiterate society and he is ready to continue his lies of less taxes while he raises them. He gives speeches of peace and love in the world while he promotes wars as he did in Egypt, Libya and Syria. He plans his next war is with Iran as he fires or demotes his generals who get in the way. […]

    He is a Communist without question promoting the Communist Manifesto without calling it so. How shrewd he is in America. His cult of personality mesmerizes those who cannot go beyond their ignorance. They will continue to follow him like those fools who still praise Lenin and Stalin in Russia. Obama’s fools and Stalin’s fools share the same drink of illusion.

    Reading Putin’s speech without knowing the author, one would think it was written by Reagan or another conservative in America. The speech promotes smaller government and less taxes. It comes as no surprise to those who know Putin as a conservative. […]

    The red, white and blue still flies happily but only in Russia. Russia still has St George defeating the Dragon with the symbol of the cross on its’ flag. The ACLU and other atheist groups in America would never allow the US flag with such religious symbols. Lawsuits a plenty against religious freedom and expression in the land of the free. Christianity in the U.S. is under attack as it was during the early period of the Soviet Union when religious symbols were against the law. […]

    Russia lost its’ civil war with the Reds and millions suffered torture and death for almost 75 years under the tyranny of the United Soviet Socialist Republic. Russians survived with a new and stronger faith in God and ever growing Christian Church. The question is how long will the once “Land of the Free” remain the United Socialist States of America? Their suffering has only begun. Bye bye Miss American Pie! You know the song you hippies. Sing it! Don’t you remember? The 1971 hit song by American song writer Don McLean:

    “And, as I watched him on the stage my hands were clenched in fists of rage.

    No angel born in Hell could break that Satan’s spell

    And, as the flames climbed high into the night to light the sacrificial rite, I saw…

    Satan laughing with delight the day the music died

    He was singing, bye bye Miss American Pie

    Drove my Chevy to the levee, but the levee was dry

    Them good ol’ boys were drinking whiskey and rye, singing…

    This’ll be the day that I die

    This’ll be the day that I die

    So, the question remains:

    How long will America suffer and to what depths?


  12. America, however, continues to go broke.

    No disrespect meant toward Stossel, but I really hate this phrase. If America suddenly had sixteen trillion, two hundred ninety-one billion, eight hundred million dollars (and change) with which to pay off its debts, then it would be broke. We’re so far down the well that “broke” looks like a tiny pinprick of light at the top.

  13. Sixteen trillion is but a trifle, sir.

  14. *It says this spending that we’ve been doing is not a free lunch.”*

    But it doesn’t matter to the 30-35% of the people who pay no taxes, have no skin in the game, don’t understand economics, believe everything the press tells them and voted for Obama. Until you start making the poor feel as responsible for the choices they make at the voting booth as the rich, “free lunch” will be the norm, as will trillion dollar deficits.

    Also, there’s been a couple of articles out today about why Republicans lost the Asian vote- the conclusions seem to be that Republicans are the party of white males, which make Asians feel uncomfortable. So to combat this, we stop being white and male? Is there anyplace left for a white male in today’s society?

  15. Not sure what universe I’m currently living, where Pravda is telling the truth and the Washington Post is calling us all racists for opposing a black woman SoS (somehow, inexplicably failing to recognize that the first Rice to be SoS, was also a black woman).

  16. Instead of a ‘Visigoth’, can I be called a ‘Frank’ – Charles Martel and all that?

  17. Krugman sez you wingers should just shut up about the deficit; that it’s just not very important.

    I believe the term he used is “deficit scolds”. So shut up.

  18. When a Nobel laureate tells you to shut up, you should obey.

  19. when Team R decided that their first priority after getting their rape baby loving asses handed to them was to boehner up, well, it made it impossible to take them seriously anymore as an opposition party

    plus they’re just so embarrassing

  20. Boner is not going man up. Ever. We will avoid the cliff somehow. Maybe twist an ankle. The Pols will not allow anything of consequence to take place which would require actual action. That is why they will avoid the cliff.

    The new normal of low growth and high taxes will be/is cemented in our culture at this point. Until such time that it becomes too painful for the majority (which will not be allowed to happen) nothing will change. An event will be rquired. Or series of events. Events that are not within the control of the Pols. Maybe the event comes from China, the middle east, massive economic failure at home. Whatever. It took Reagan decades of speaches and radio addresses to become relevant enough to be listened to by more than a handful of people. The GOP is probably not the place to look for leadership at this point. Leadership will come, if at all, and as always from what is now deemed the fringe.

  21. Prepare to be relegated even further to the fringe, Visigoths and “purists.”

    Yeah, VisiGoth was pretty good, back in the day. But then Goth 1-2-3 was released and blew it out of the water.

  22. It costs the government $2.25 for every $1.00 of welfare it hands out. It would be cheaper to fire a bunch of federal bureaucrats and let them go on welfare.

  23. Correction: $2.45

  24. Did you really think welfare was about helping the poor? It’s about government union workers and the money the unions kickback to the Democrats. Votes and power. Just like TSA. The only security they are about is job security for them and the Dem.

  25. “Stone-ignorant mob democracy is to classical liberalism what representative government is to the Constitution.”

    JHoward, I think I get it, but not sure. Please elaborate.

  26. It’s the “representative government” part that I’m iffy about.

  27. why is grahmansty on greta? effin’ has been circulating on the mbm circuit.

  28. In my view, unless elected representatives act with integrity according to principle and law (i.e., the Constitution) to protect the individual rights of each individual from the will of the majority; then they are just representatives of the mob. That is, a mob-ocracy by proxy.

    Which, btw, also negates any fundamental distinction between a “republic” and a “democracy” (i.e., a “pure” democracy).

    Do I have it right?

  29. So why not just print $16T and pay the debt off?

  30. So why not just print [a] $16T [bill] and pay the debt off?

    Why waste all that nice expensive paper and ink?

  31. It could even have “The Wons’ picture on it. A twofer.

  32. Sorry, I meant add some electronic zeros to the cash entry on the Fed’s balance sheet.

    The Fed’s balance sheet. I crack myself up sometimes.

  33. Pingback: One Party Nation » Cold Fury