During forty four of cold war the strategy was to assure an outcome so
disastrous to both sides than nobody would be stupid enough to cross the line.
It seems our political parties have tried using a similar tactics, all hoping
that nobody would be stupid enough to allow us to go over the Fiscal Cliff. I
wonder what the odds are in Las Vegas; probably about fifty fifty. Of course in
the cold war, no one purposely put us in a position that might end in mutual
assured mass destruction, but our Congress and President have purposely put us
in a position that could well end in economic Armageddon.
Seem a bit
masochistic to me since the political consequences on both sides are disastrous;
moreover it seems extremely sadistic since even if our elected leaders are
willing to commit political Harri-Cari most of us would rather not be handcuffed
to their corpse as it flows over Niagara Falls.
We have been talking
about the need for extensive tax reform for two decades, yet the 112th Congress
elected to "kick the can" and delay a decision on the "Bush tax cuts" with a
self imposed expiration date of December 31, 2012. It comes as little surprise
that they chose this date since it's a presidential election year, with all the
House, and half the Senate up or grabs. The obvious rational was that 1. the
election would bring about change in the balance of power and as such one party
could get more of what they want.......or 2. A particular incumbent looses and
as such has little motivation and nothing to lose during the current lame duck
session........or 3. They are all totally ignorant of the fact that this inane
game of political chicken is inherently dangerous.......recessions have started
that way. I lean toward 1and 2, but 3 is not out of the question.
Some,
if not all, of this is semantics, posturing and political gamesmanship. What
difference does it make if you gain revenue through raising the marginal rate of
the top bracket by 4.5%, or by a reduction of deductions (thus raising effective
rates of the same group)? More revenue is more revenue! Well, I'll tell you; the
difference is President Obama campaigned on raising the rates on " the top 2%"
and by golly he intends to do so. Now, what is the difference in spending
reductions as a percent of the previous fiscal year's budget, or a percent of
GDP? Well I'll tell you; it depends on what you cut, and who gets hurt most from
said cut. If those who are directly in the hurt locker as a result of government
spending cuts happen to be YOUR constituents....ouch.....if it's the other
guy's.....who cares.
On top of all this, in the summer of 2011, our
elected officials failed to reach a compromise on raising the federal debt
ceiling. For much the same rational listed before, they "kicked the can own the
road" till the exact same date as the tax cuts expire. Add to that the separate
"death tax" set to change from a 5million per person exemption to one million,
and you realize that Congress has really backed itself into a corner. The
inability to reach a resolution in 2011 resulted in a reduction of the United
States credit rating from triple A, and a negative reaction by the stock and
bond markets world wide. This time, absent a deal, we would face way higher
taxes, stifling any economical growth, sequestration, leading to higher
unemployment in an already still fragile economy, and a likely recession. I
don't know about you guys, but going down that road for no particular reason
other than ideology, and political gamesmanship just seems insane.
Both
political parties just spent a total of six billion dollars in the last election
to remain pretty much status quo. That comes to twenty bucks for every man,
woman, and child in America. Wow, they could have just handed out a twenty to
each one of us at the polls. Would be another good reason to go vote. Anyway,
the joke is on Congress since the balance of power remains the same and how they
have to actually do something. Unfortunately, we all could become the
punchline......that is if you can consider assured mutual mass
destruction......a punchline. Do we really miss the cold war tactics so much as
to create our own? Masochism indeed.
