Friday, December 28, 2012

The Demagogue Cliff

There really is no "fiscal cliff" to speak of. It's a manufactured event that simply reflects a poorly conceived--and last ditch--plan to increase the debt ceiling from back in 2011. The goal was to force the hands of Congress and the President, with regard to the steadily growing national debt, to solve the problem, i.e. lower--or at least stop growing--the debt. On a year-in, year-out basis this means lowering the deficit.

But note: this was never really about decreasing federal spending overall; such an option was never made available, was never really put on the table. Why? Because we are addicted to spending as a nation and a people. We expect the government to have money to spend, always and for all things. Consider the damage caused by Hurricane Sandy. It was indeed widespread and serious. And it is certainly a legitimate function of the Federal Government to step in, to lend a hand and provide resources of all sorts.

And where did that money come from? One way or the other, it came from the pockets of our children and grandchildren. For all of the revenues taken in by the Federal Government--through taxation and the like--were already accounted for. Indeed, future revenues are already accounted for, already spent. As I noted previously--a little over a year ago, actually--the much-vaunted Payroll Tax Holiday was basically the same sort of thing: a huge chunk of change that went directly to the national debt.


Because the Federal Government saves nothing. It spends every last cent it takes in, and then some more on top of that. So what is really on the table for these fiscal cliff talks? Two things: tax increases and spending cuts in the future (or cuts in the proposed rate of growth). And in fact if we go "over the cliff," that's exactly what we will get: immediate tax increases, future cuts (that likely will never happen), and some cuts in current rates of growth (meaning more spending, just not way more).

Given this reality, here's a question: why all the fear among politicians about going off the cliff? People imagine this as some sort of mile-high cliff that--if one fell off--means a crushing fall. In reality, it's more like walking up a steep hill, then stepping off the curb. Sure, you might stumble if you aren't paying attention (and right now, everybody is paying attention), but it's hardly the deathly serious event it is being portrayed as.

Wait, I take that back. It is deathly serious to some people: our leaders in Washington, D.C. Not because of the spending cuts, but because of the tax increases (the end of the Bush tax cuts). Let's be crystal clear about this point, too: going over the cliff means returning to the tax rates of the Clinton era. And that means an end to the 10% bracket. The lowest rate would be 15%. In and of itself, this one rate change means everyone would owe more taxes. Everyone (granted, many low-income earners would still end up not owing anything). The rates for other brackets would also increase, including a new top rate of 39.6% (as opposed to the current 35%). So, the wealthy (Obama's "millionaires and billionaires") would see the biggest increases by far. Remember when the cuts were decried for disproportionately favoring this latter group? So pay no heed to pundits and politicians now saying exactly the opposite. They are, quite simply, liars.

Still, there's no getting around a reality: a majority of citizens will owe more taxes if the Bush cuts are allowed to expire. "Majority" is the key word, for it also means a majority of voters and encompasses the middle class as a whole. And that's it in a nutshell. Even though the elections are over, no one wants to be held responsible for "raising taxes on the middle class." Can you think of a politician who successfully campaigned on such a theme in recent memory? It's okay to call for raising taxes on "the rich"; there are enough people easily swayed by class warfare rhetoric. But no one--especially in a tough economy--is going to be successful in politics these days by claiming that the middle class "isn't paying their fair share." Right?

Well, I guess that depends on whether or not one can successfully present such an idea in the proper context. Because here's the truth of it: if people really want an ever-expanding Federal Government with more and more programs, with money to spend on pretty much everything and they don't want a crushing debt burden...

That's right, everyone needs to pay more in taxes. Everyone. But such an argument is not really being offered because almost nobody on the Left in D.C. actually has the necessary guts to make it. So maybe it's time for people on the Right to start making it.

If there is no deal, if we do topple over "the cliff," reality may come crashing down on those in power. The dog and pony show will necessarily come to an end, as taxes go up, along with spending and the national debt. Because this entire argument is all about creating a narrative to justify fiscal irresponsibility far into the future. The only way to counter it may be to blow away the smoke, to break all of the mirrors, to let people see the truth.

Too many people have forgotten the lessons of the past, they are too quick to believe in government as a solution for all things, to accept that those in charge really do know best and should be trusted without hesitation. Yet, they have--Democrat and Republican, alike--mortgaged our future in service to their own current needs. Let us pay heed to the words of Ronald Reagan, in this regard:

It is high time the demagogues were forced to fully reveal themselves. Yes, many of us konw who they are, but far too many don't.

In that regard, we should welcome the fiscal cliff. We should be ready for our own leap of faith:

The Breath of God: Only in a leap from the lion's head shall he prove his worth...

Cheers, all.

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