Let’s talk about the so-called “fiscal cliff.”
It was a deal put originally together, by Barack Obama and a GOP House, that was considered to be so awful that surely both sides would blink and come up with a better deal before the tax cuts from the Bush administration and the payroll tax cut from Obama’s first term expire and an across the board spending cut that includes the Department of Defense kicks in.
The President and the chattering media class thinks that he has the upper hand because the public will blame the Republican House of Representatives if nothing happens.
And the Republicans, having just had Barack Obama open a can of Whupass on them in the last election, almost believe that.
So, Obama is saying no deal unless we tax the crap out of the rich and basically leave current spending where it is.
And, not surprisingly, given the institutional lack of backbone in Washington, many Republicans are talking about raising taxes to go along with Obama.
Nobody on the GOP side seems to be asking a very legitimate question:
Exactly what would happen if they simply do nothing?
True, for a few weeks, Obama will browbeat them. And equally true, the media will also hammer them.
On the Jewish holiday of Passover, the text of the symbolic meal, the Seder, asks a Hebrew question. Transliterated, it is: “ma nishtana halaila hazeh?”, which in English means: Why is this night different from all other nights?
The Republicans in Congress need to ask themselves “ma nishtana halaila hazeh?”
Why is what would happen if they do nothing different from what always happens?
The truth is that they’re going to get hammered by both Obama and the media anyway; but if they do nothing, Obama has to live with an across the board spending cut that they would never, ever get any other way.
Sure, taxes would also go up; but the combination would put us on a path to fiscal sanity.
And there would probably be no need for a standoff on a debt ceiling increase because the combination of taxes and immediate spending cuts would remove the necessity for an increase.
Out here in the high desert, we don’t know much about economics. We don’t work for Goldman Sachs, and we don’t have degrees in economics from Johns Hopkins University (unlike, say, Tim Geithner.)
But we did watch Butch Cassidy and the Sundance Kid in 1969, so we understand a little about jumping off of cliffs. And we think that if the Republicans in Congress would just stick to their guns, they’ll get their spending cuts; and Barack Obama, Nancy Pelosi, and Harry Reid will ultimately get the grief for the tax increases and any economic fallout from the jump.
Can John Boehner really look us in the eye and tell us with a straight face that the Pentagon cannot do with a mere $478.1 BILLION in 2013, saving the taxpayers $47.3-BILLION out of their base budget?
Let’s stop kidding each other. As important as we think defense is as a line item, we can probably squeeze a 9% budget savings out of it. Like Butch and Sundance, we’ll probably land safely.
You’ll hear some Generals and Admirals and civilian defense contractor executives scream to high heaven; but, like Sundance, they’ll just have to learn to swim quickly.
Same for Medicare doctor reimbursements.
Maybe it will finally force us to look at our healthcare system with an eye to actually reducing costs as opposed to merely bloviating about it.
Think of it as being put on a forced diet.
As for the tax increases, Obama will find that Americans are a whole lot smarter than he gives them credit for; and behavior will start changing immediately to blunt them. Accountants will reach out to help anybody who will listen to them, and so will the big tax preparation firms. Nobody will get gouged too hard or for too long.
The lasting legacy will be the spending cuts and the fact that all future spending bills will have to originate in the House. And the House will control the rest of Obama’s term, for better or worse.
So, let’s jump. If the fall doesn’t kill us, we’ll probably escape.
Photo credit: healthreformexplained.com/fiscal-cliff/