Sunday, November 25, 2012

Fiscal Cliff for Idiots (Think Congress Here)

The politicians are franticly seeking a path for avoiding the ‘fiscal cliff’ so that they can be the saviors of the nation. Republicans are beginning to explain how they are willing to consider abandoning their pledge against any new taxes in the context of thinking about raising the tax-rates as being their duty and responsibility to the nation and the public. Democrats are making their case for having to address changes to the entitlement programs that are a major factor in America’s spending deficit. The entitlement programs include not only Medicare, Medicaid and Social Security; but also the Defense Department budget.

The politicians are ranting and raving about the impending disaster, catastrophe and Armageddon that will surely destroy the economic recovery, plunge the nation into a recession and produce wide-spread misery and suffering across the nation. Yes they are up to their old tricks, preparing the masses for the political brinksmanship that they will tout simultaneously as both a partisan and bi-partisan victory that they managed to accomplish to save us all.

 Now here’s the part that the politicians aren’t promoting. The fiscal cliff was the bi-partisan agreement reached last year in order to prevent the doom and gloom scenario that we were all collectively facing. And by the way the financial world has indicated that the prior cliff that the politicians caused because well their just incompetent cost the country even more in interest charges due to their inability to compromise on a good solution. The politicians aren’t explaining that this is a crisis of their own making and is a direct result of their not finding solutions to the obvious problems because their ‘principles’ and ‘values’ get in the way. In other words, they can’t do their jobs because they have to adhere to some strict code that is at odds with their duty and responsibility to the country and the people.

So let’s examine one of the ‘principles’ that prevents success: no increase in tax rates (even for a small select group of citizens). Many of the Republicans took a pledge to not raise taxes as a central tenet of their political philosophy and commitment. Now some Republicans are explaining that they may have to terminate their commitment to their prior oath to this principle, for the good of the nation. Considerations of some limited increase in tax rates may be necessary to address the problems facing the country. This would all be reasonable if there wasn’t a flaw in the logic. Now perhaps they will claim and argue that there is no flaw, no error or self-denial at work here; but it’s not what they think or claim at this point, it’s what you think.

In 2011, Congress passed the Sequestration bill that committed Congress to reduce the 2013 budget if they don’t come up with a plan to replace the $900 billion in cuts with which they threatened themselves. Now are approaching the deadline that will evoke the Sequestration consequences because Congress is demonstrating their inability to do their jobs. So the ‘Bush era’ tax-cuts will expire and tax rates will rise across the board for everyone in 2013. Let’s get this straight, Congress agreed to allow the tax-cuts to expire for everyone. So the difference between letting the current tax rate cuts expire and raising tax rates actively is that in one case the public will pay more in taxes and in the other the public would pay more in taxes. This distinction is a very important and significant difference indeed.

So Republican Congressmen/women voted on a bill that would not raise tax rates it would only allow tax-cuts to expire. How exactly do you think they can show the financial difference, or the difference in costs to the tax payer, or the difference in its impacts on the economy? Wasn’t Sequestration a vote for raising taxes? I am not saying it wasn’t for a good reason or that it’s not something that they shouldn’t have done; but how is it not doing the very thing that supposedly they would not do? I suppose that they perhaps made a mistake and in the spur of the moment they thought first about the needs of the country before they thought about their party’s political rhetoric.

So now we have tax rates about to rise, and Congress is desperately looking for a solution that doesn’t make them have to accept the consequences of the unthinkable agreement that they made.
Tomorrow, a simple view of how easy it is to deal with this particular problem.

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