“Fiscal Cliff” Is Mostly Fiction, With A Bit of Truth Thrown In


With the election over and done the new matter at hand is the “fiscal cliff” – a dire menace now facing the nation.

As in all cases where the media whip up excitement or panic one must distinguish between packaging and content. So let us address the packaging first:

The issue of raising the national debt ceiling surfaced at a most inconvenient time – just as the election campaign was getting into high gear. Neither the administration nor the parties in Congress wanted to deal with such difficult matters, so the issue was pushed beyond November 6. To avoid the appearance of procrastination this agreement was couched in stark and dramatic terms: do or die, save the ship or sink. The media people, always looking for excitement, gladly picked it up from there.

In truth there is no “do or die” moment. The sequestration agreement is an act of Congress, and Congress can repeal or modify it at any time. The most likely course then is a series of twists and turns along the cliff edge, with dramatic episodes and temporary “victories” by either side – until all parties concerned can either save face or claim to have rescued their constituents from catastrophe.

In other words, it will be business as usual covered by inflated claims of having, against all odds, saved the nation.

Which brings up the question: saved from what? What is the core issue?

It is, as ever, the economy. Despite all claims to the contrary, there is no real recovery, only smoke and mirrors based on questionable statistics and massive spending of borrowed and printed money. The simple fact is that the tax revenue the economy provides in its current state is insufficient to support basic government functions, much less account for the growing liabilities of “entitlement” programs. America is out of money and the only way this has been addressed is through running up the national credit card.

The political class, in cooperation with the financial powers-that-be, has allowed this situation to develop, unhindered, for decades. It is unlikely it will suddenly “see the light”. Even less probable is the formulation of an effective policy and agreement to implement it. Kicking the can down the road, no matter the can’s growing size, is still the most likely course.

Our situation is not unique. The same problem exists, in a variety of forms, in the European Union, China, Brazil and Japan, due to the globalization of trade and financial flows. This has led to unprecedented increases in wealth and power for the world elites, both political and financial. So a reversal of these trends is unlikely, regardless of the potentially disastrous outcome.

A real solution does nevertheless exist, and is available today as it was in historical situations resembling ours.

We have the capacity, as a nation, to resolve the issues facing us through a combination of effective government policy and private initiative. We have done it before. We can do it again. All we need is clear vision and a willingness to work together.

Letting the Washington (and Wall Street) crowd run the show for another two – or four – years is not acceptable. We, as citizens, must require that our true interests be served.

We will address this very issue in our next post.