Thursday, November 15, 2012

The "Fiscal Cliff"

Now that the election is over, it seems we all need something new to obsess about; and an obvious candidate has been found in the so-called "Fiscal Cliff," which we are supposedly facing (and possibly falling off of) in just another few weeks. 

One of the unfortunate counter-weights to the many genuine benefits of living in our modern meda-connected world is the burden of having to refer to things in silly ways. What will  happen on January 1 is indeed a problem and an issue which warrants an active attempt at resolution. It is, however, a problem entirely of our own making. It is not some naturally occurring obstacle, which is what the imagery of a "cliff" connotes. The "Fiscal Cliff" is a direct consequence of our political system's failure to address important issues in anything resembling an adult way. When in 2011 it was necessary once again to raise the Debt Ceiling, the adult thing to have done, of course, would have been to do just that - to raise the Debt Ceiling. An adult does not order an expensive meal, eat it greedily, and then refuse to pay the check - which is what it means to vote against raising the Debt Ceiling, in other words to vote not to pay bills the Congress has already authorized and the country has accordingly incurred. Incredibly immature behavior on the part on one political party resulted in a compromise (too late, however, for the country's credit rating). The "stick" to guarantee that a workable compromise plan would be adopted was the threat of sequestration (combined by coincidence of calendar with the due date for the expiration of the Bush tax cuts). When Congress again failed to do its job, the "stick" that nobody really wanted remained and threatened to administer a severe economic beating to the country.

The tax part of the crisis is the easier one to resolve. On January 1, the Bush tax cuts automatically expire, and so taxes will go up. There seems to be a bi-partisan consensus that this would not be such a good thing for the economy right now. There seems to be a bi-partisan consensus that the lower Bush-era tax rates should be continued for most taxpayers. The basic disagreement concerns the least justifiable of the Bush tax cuts - for those earning more than $250,000. The President has the obvious leverage here. All he has to do is be ready to sign a tax bill that keeps the lower tax rates for everyone else - except for those earning more than $250,000 - and to be ready to veto any bill that attempts to preserve the Bush tax cuts for the rich. That would put the opposition party in the position of either accepting higher taxes on the rich (which would upset only them and their rich clients) or making everyone pay higher taxes (which would upset most of the country).

Sequestration raises much more complicated questions, since it is involves cutting the budget in areas people really care about.  More on that another day!

Meanwhile, it seems this would have been a good time to resume a serious moral reflection on the economy and the effects of economic policies on people. The US Bishops did this in 1986 in their landmark statement, Economic Justice for All, which perhaps we might all do well to reconsider in today's context. 

1 comment:

  1. "...It seems this would have been a good time to resume a serious moral reflection on the economy and the effects of economic policies on people."
    Ha ha! No, instead, the USCCB is going to drop the beautiful (but, admittedly, ignored) 1966 statement on penance and go back to an overly simplistic rule. Reflections on the effects of the economy upon the poor will have to wait for another day, City Father!