#671 – Dick Bernard: New Years Eve, 2012. Reprise on The Fiscal Cliff, the Debt Limit and Other Things

I wrote about this general issue a few days ago. Here is that post.
A few days ago I predicted to a good friend that by tonight the Congress would figure out some way to come to an agreement on their differences and reach a settlement that could be signed by the President. Such a settlement can be made only by the Congress, with the House of Representatives in the lead, as required by the U.S. Constitution.
I told my friend that I’d often seen “cliff stuff” before – usually in the hot-headed moments near the end of teacher contract negotiations.
Almost always, in those cases, there was a settlement. Rarely did one party or another elect to go over the cliff: reason utimately prevailed. Usually it was one party or the other in such a crisis, perhaps someone in labor, perhaps someone in management, who played the primary role in the end game before walk-out…rarely did both parties tell each other equally to ‘go to hell’…. Sufficient people knew that there were bad consequences for both ‘sides’ if there was a strike and efforts were made to settle.
In labor terms, these days, we are seeing a new variation on this theme: the “lockout” of Minnesota and St. Paul Symphony Orchestras is a current management-option way around collective bargaining, but its effect is no different than a strike. Set your feet in cement, and that cement will ultimately harden. The consequences are unpleasant. You are stuck.
It is best to find a way to settle.
At this writing, in early morning on New Years Eve, perhaps 18 hours away from the end of 2012, it appears that my prediction on the Fiscal Cliff negotiations will be wrong.
We appear to be going over the cliff, whatever that comes to mean.
There’s still time to settle, and I’ve seen stranger things in the last hours before “push comes to shove”, but it’s going to require adult behavior by our elected House of Representative members in particular, and I see little promise of that.
It happens that today, Dec. 31, 2012, my Representative in Congress is still Republican Michele Bachmann. After the New Year it will be Democrat Betty McCollum. The positions of both are worth watching, now and down the line.
(Bachmann continues in office, but in another part of Minnesota, though she still lives in this District. McCollum is also a veteran congresswoman. The configuration of their districts have changed.)
The U.S. House of Representatives remains Republican, though with a smaller majority; the U.S. Senate remains Democrat, with a bigger majority, but not enough to avoid the 60% vote needed to avoid filibuster by the minority. How this change in composition will change the results is uncertain at this point.
What happens today with the Cliff has especially big potential consequences for especially those with the most limited means to survive – the lower middle class and the poor.
The next issue on the horizon is the Debt Limit controversy, essentially, whether the U.S. Treasury can pay debts already incurred by previous Congressional action.
Like the Fiscal Cliff, the Debt Limit is subject to much misinformation. Both topics are abstract and distant and difficult for a layperson to understand.
I took a look at the Wikpedia entry on U.S. Public Debt, which includes a section on the Debt Limit, and I think it gives a reasonable base at least for thinking about the issue.
The Debt Limit has lately become a new political weapon, and it is a dangerous one including for its proponents. Essentially, the Congress, once again, the Congress, will be tempted to say that the United States is not authorized to pay Debt which that same Congress has authorized in the past, a great part of which is to pay for wars, including the current ones.
Basically, this would seem to me a bit like a consumer, myself, voluntarily incurring a huge debt which I cannot pay, which I then simply refuse to pay with the consequence of losing my credit, or my house, or whatever else comes in the wake of my foolishness.
There are big differences between personal debt, and debt for a country like ours, of course. The Wikipedia article above referenced seems to give a pretty good and balanced view of the topic over U.S. history.
This game of chicken is not much different than any other potentially fatal game.
What can you do, as a citizen, today, tomorrow and on? Make your views known to your Representatives.
Will, Dec 31: I don’t pretend to understand it and have read a number of pundits and economists who say the fiscal cliff doesn’t even exist and is a political ploy of some kind.
Jeff, Dec 31: I haven’t been following it, we are mostly powerless on this.
My thinking is they will let the fiscal cliff occur, then make some
adjustments in January… with the spending cuts fought over prior to the
debt ceiling vote…
The Farm Bill is not yet done either, another mess.
Bruce, Dec 31: The psychology behind your analysis of the “fiscal cliff” would be correct, if the cliff was a real crisis. It’s a manufactured for political reasons, and that is why they don’t have the urgency to avoid a real catastrophe. They know that, and so does the “mainstream media”, but they choose not to acknowledge it. For the politicians, it’s not acknowledged for win/lose political reasons, and for the media, it’s a sexy story.
Both sides have set up taxes as the bad guy. If we don’t come to a compromise, taxes will go up. Well, really they should go up for everyone. They should be raised until the cost of the two wars we’ve waged for the last ten years have been paid. These were wars fought in our name for, in my opinion, no good reason. The increased taxes should be a reminder that we have a collective responsibility, at very least fiscal, for these terrible wars.
Taxes are the easy part of the “fiscal cliff”. Cuts to the Federal Budget are more difficult. The automatic across the board cuts will show the American people what we need to know, that the Federal Government is a fiscal engine that provides jobs. Jobs directly, but more importantly indirectly. If the Federal government is be responsible for job layoffs, than the unemployment benefits should be raised along with other “safety net” programs until the economy is reconfigured, which would the right time to set up a green economy for the 21st century.
It would be an anxious and exciting time. I wish I was 30 years younger, so I could be part of the rebuilding of America.

1 reply
  1. Ron
    Ron says:

    “As we stumbled through the edge of the Fiscal Cliff, let ‘s look at what we accomplished in this past election:
    Twenty-one of 22 incumbent senators were re-elected, and 353 of 373 incumbent members of the House were re-elected.
    The American people have re-elected 94 percent of the incumbents who were running for re-election to an institution that has an approval rating of about 9 percent.
    This probably indicates, as an electorate, we are a nation of idiots.
    We ‘re now stuck with the useless, dysfunctional government that we deserve….Should you proud of yourself?”


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