The
election is over and the fiscal cliff is looming. It is time to get
back to Washington, roll up the sleeves, find some common ground, and
fix the problem. Senator Kay Bailey Hutchison (R-TX, retiring) has
assured us that both Democrats and Republicans are intent on confronting
the situation, so we can all relax, right?
Unfortunately, Senator Hutchison is wrong. There is not one, but several fiscal cliffs, and depending on your party or your philosophy, these cliffs are different, mostly contradictory, and demand completely opposite solutions. Compromise can only be reached on common ground, but the only common ground is that there is a problem, and something needs to be done, soon. It is extremely important that the right thing be done, because should the wrong thing be done, not only will the problem persist, but it will be made worse.
So what are these cliffs? If you are a Democrat, the first cliff is the debt ceiling. Should Congress fail to authorize the borrowing of more money, the Federal government will be unable to pay about 43% of its bills, necessitating drastic and immediate spending cuts. The lack of government spending will plunge the economy into a second recession. The second cliff is the end of the Bush tax cuts. The increase in taxes on the poor and middle class will take money out of their pockets, and so being unable to spend it, the economy will fall into a second recession due to lack of consumption. The prescribed Democratic solution is to immediately borrow a lot more money, raise taxes on the wealthy, cut taxes on everyone else, grow the economy (through government spending), and spend like mad.
Unfortunately, Senator Hutchison is wrong. There is not one, but several fiscal cliffs, and depending on your party or your philosophy, these cliffs are different, mostly contradictory, and demand completely opposite solutions. Compromise can only be reached on common ground, but the only common ground is that there is a problem, and something needs to be done, soon. It is extremely important that the right thing be done, because should the wrong thing be done, not only will the problem persist, but it will be made worse.
So what are these cliffs? If you are a Democrat, the first cliff is the debt ceiling. Should Congress fail to authorize the borrowing of more money, the Federal government will be unable to pay about 43% of its bills, necessitating drastic and immediate spending cuts. The lack of government spending will plunge the economy into a second recession. The second cliff is the end of the Bush tax cuts. The increase in taxes on the poor and middle class will take money out of their pockets, and so being unable to spend it, the economy will fall into a second recession due to lack of consumption. The prescribed Democratic solution is to immediately borrow a lot more money, raise taxes on the wealthy, cut taxes on everyone else, grow the economy (through government spending), and spend like mad.
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